Taiwan is in the midst of a sustained recovery, according to a survey of business indicators released May 27 by the ROC National Development Council, with the overall monitoring indicator flashing green for the third consecutive month.
According to the NDC, the composite indicator increased by four points month on month to 29 in April, its highest level in three years. Leading and coincident indicators rose from the previous month, giving strong evidence for the sustainability of the recovery going forward.
NDC Deputy Minister Chen Chien-liang said the figures show the situation was optimistic for the overall economy, and the composite indicator was likely to remain green in May. If the indicator remained green for the rest of the year, then gross domestic product growth for the full year could easily break the 3 percent threshold, he added.
Looking forward, the NDC said, the European and U.S. economies are continuing to expand, which will lift Taiwan exports. The only cause for concern is a slackening of growth in mainland China and developing countries.
From a domestic viewpoint, local semiconductor firms continue to invest in upgrading their manufacturing base and the pace of expansion of the 4G network is accelerating, the NDC added.
The government is also promoting the Free Economic Pilot Zones, which will reduce barriers to investment. Consumer spending will continue to be boosted by the wealth effect produced by a rising TAIEX, purchasing stimulation of mobile devices, as well as additional spending associated with the Dragon Boat Festival.
The indicator is created by adding scores from one to five of nine component indicators, giving a possible range of nine points to 45. Of the components, the TAIEX average closing price gained one point, changing from green to yellow-red. The industrial production index, the customs-cleared exports and sales of trade and food services all gained one point to change from yellow-blue to green. The light signal for the other five components remained unchanged.
The composite leading index increased by 0.31 month on month to 104.9 in April, with the trend-adjusted leading index up 0.18 to 101.31 over the same period. The trend-adjusted index is composed of seven subindexes, of which five trended positive over the period.
The Taiwan Institute of Economic Research manufacturing sector composite indicator, TAIEX average closing price, index of export orders, net employee accession rate and building permits all exhibited positive cyclical movement. However, the North America-based manufacturers of semiconductor equipment book-to-bill ratio and real monetary aggregates M1B had negative cyclical movements.
The coincident index stood at 104.65 in April, up by 0.38 from March, with the trend-adjusted index increasing by 0.25 to 101.07 over the period. Five of the seven indicators making up the trend-adjusted index had positive cyclical movements: machinery and electrical equipment imports, customs-cleared exports, manufacturing shipment producers’ index, retail and service trade, and industrial production index. Electric power consumption and nonagricultural employment showed negative cyclical movements. (SDH)