Taiwan’s business climate monitor improved last month, transitioning from steady growth for the first time in five months, as robust global demand for artificial intelligence (AI) products and new iPhone shipments boosted exports and corporate sales, the National Development Council (NDC) said yesterday.
The council uses a five-color system to measure the nation’s economic state, with “green” indicating steady growth, “red” suggesting a boom and “blue” reflecting a recession. “Yellow-red” and “yellow-blue” suggest a transition to a stronger or weaker condition.
The total score of the monitor’s composite index rose to 35 points from a revised 31 in August, ending a four-month streak of “green” indicators that had signaled a tepid recovery.
Photo: CNA
The shift indicates the economy is entering a clear expansion phase, the council said.
“AI-driven exports continued to support industrial output and manufacturing sales,” NDC Department of Economic Development Director Chen Mei-chu (陳美菊) said.
The boom also lifted wholesale, retail and restaurant revenues, while local share prices surged to record highs, she said.
Beyond AI demand, new iPhone shipments helped drive manufacturing output, and a US Federal Reserve rate cut provided additional support to business activity, Chen said.
The index of leading indicators, which forecasts economic conditions over the following six months, edged up 0.07 percent to 100.22.
Four of its seven components picked up: money supply, stock prices, export orders and manufacturing sentiment; while construction floor area, labor accession and semiconductor equipment imports moved lower, the NDC said.
The index of coincident indicators, which tracks current economic conditions, stood at 105.27, down 0.11 percent from August, as industrial production, manufacturing sales, and machinery and electrical equipment imports weakened.
However, exports, overtime hours and electricity consumption all gained momentum.
Rising demand for AI, high-performance computing and cloud data services, coupled with the approach of the year-end shopping season in the US and Europe, is expected to drive Taiwan’s exports toward a new annual high, the council said.
On the investment front, AI-related opportunities are prompting suppliers across the value chain to expand advanced manufacturing capacity and attracting foreign investment in materials, equipment, power systems and smart applications, it said.
Private consumption is also expected to strengthen, supported by a stock market rally that has created a wealth effect, a holiday-heavy fourth quarter, and government stimulus measures such as extended tax breaks for vehicle replacement and subsidies for energy-efficient appliances, the council said.
Further support could come from the government’s planned NT$10,000 cash handout next month, Chen said, adding that surveys suggested that most recipients intend to spend the money on travel or investments rather than saving, which should bolster consumption through the end of the year.
Still, uncertainties surrounding US-China trade negotiations and the policy paths of major central banks pose downside risks to the global economic outlook, she said.
An ongoing US probe into the semiconductor industry also warrants close monitoring, as it could weigh on sentiment, she added.
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