July 29, 2019
Taiwan’s sluggish economy is part of a regional trend.
Taiwan’s economy remained sluggish in June as the global economy slowed down, but an index gauging the local economic climate improved from a month earlier in the wake of an increase in investment by Taiwanese firms operating overseas, the National Development Council (NDC) said Friday.
Data compiled by the NDC, the country’s top economic planning agency, showed that the composite index of monitoring indicators for June rose three points from a month earlier to 21, flashing a yellow-blue light, a category ranging between 17-22 points.
It was the sixth consecutive month in which the local economy flashed a yellow-blue light, according to the data. However, the 21 points in June was tied with that of April, the highest level so far this year.
The NDC uses a five-color system to gauge the country’s economic performance, with blue indicating economic recession, yellow-blue representing sluggishness, green signifying stable growth, yellow-red referring to a warming economy and red pointing to overheating.
While the local economy remained haunted by trade tension between the United States and China, Wu Ming-hui, head of the NDC’s Department of Economic Development, said the global trade disputes have prompted many Taiwanese firms operating in China to invest more in Taiwan to avoid any adverse impact.
Due to their investment, Taiwan saw capital equipment imports grow, Wu said.
In addition, a cut in personal income tax and subsidies from the government on travel in Taiwan also boosted private consumption, Wu said.
Of the nine factors in the composite index, the data shows, the sub-index on merchandise exports flashed a green light in June, compared with a yellow-blue light in May, while the sub-index on machinery and electrical equipment flashed a red light, an improvement from an earlier green light, the NDC said.
The improvements in the two factors served as a driver to the overall index for the month, the NDC said.
Meanwhile, the sub-index on money supply continued to flash a green light in June, while the sub-indexes on share price changes, industrial production, non-farm payroll, and business sentiment in the manufacturing sector kept flashing a yellow-blue light, the NDC said.
In the same month, the sub-indexes on sales generated by the manufacturing sector and revenues posted by the retail, wholesale and food/beverage industries flashed a blue light, according to the NDC.
In June, the leading indicator, which predicts the country’s economic performance over the next three to six months, rose 0.33 percent from May, marking the sixth consecutive month of growth, the NDC said.
The NDC said the coincident indicator, which gauges the current economic situation, stopped a 16-month falling streak in June, up 0.01 percent from a month earlier.
Wu said that despite domestic and global demand showing signs of improvement in June, the Washington-Beijing trade dispute has not yet been resolved, while the Brexit issue still imposes risk, so more time is needed to observe the changes in the local economic climate.