National economy faces greater uncertainty, according to NDC
As exports fall and the global economy faces increasing uncertainty, the National Development Council (NDC,
) tuned down the economic monitoring signal from “green” to “yellow-blue” for March.
It was the second “yellow-blue” signal, which ranks second from the bottom of NDC’s five signals, recorded over the past year. The “green” signal, which is one scale up and represents a stable economy, persisted for 10 months.
Last month’s reverse in signal was a reflection of the nation’s fewer- than- expected exports, which dropped nearly 9 percent in March, according to the Ministry of Finance’s report.
Further adding to the uncertainty is the Global Insight’s prediction that global exports will drop 8 percent this year.
The world economy is very unpredictable, said Wu Ming-huei ( ), the director of the NDC’s Economic Development Department.
In the U.S., the stagnant wage level casts a shadow on its recovering economy; in Europe, Greece’s debt problem looms large over the eurozone; as for mainland China, its Purchasing Manager Index (PMI) fell below 50 recently, which is an indication of a contracting manufacturing base.
All in all, the latest developments point to “higher economic risk” in general, Wu said. Her remark concurred with Global Insight’s outlook. The global growth rate was recently adjusted from 2.9 percent down to 2.8 percent by the forecasting agency. The U.S.’s growth has also been tuned down from 3 percent to 2.8 percent.
On the positive side, Wu expressed confidence in the growth of domestic demand which is likely to buoy the economy.
A Closer Look at the Index
Three of the nine components that make up the monitoring indicator edged down in signal: the average stock closing price, customs- cleared exports, and imports of machinery & electrical equipment.
The Taiwan stock exchange weighted index yesterday hit the 10,000-point mark for the first time in 15 years, but the performance was not yet reflected in the report. Its signal changed from the booming “red” to “green” for March.
The renewed momentum in the stock market may have a positive impact in the future, however.
The signal for imports of machinery & electrical equipment moved from “red” to “yellowblue.” It shows local firms are decreasing their purchase for tools on the manufacturing floor, Wu said.
Only the nonfarm employment index’s signal changed for the better, switching from “yellowblue” to “green.”
With revised data, the trendadjusted leading index stood at 98.62, down by 0.47 percent from February.
Among the seven indicators making up the trend- adjusted index, the SEMI book-to-bill ratio, and the TAIEX average closing price showed positive cyclical movements from the previous month.
The index of export orders, building permits, net accession rate of employees on payrolls of industry and services, the TIER manufacturing sector composite indicator, and real monetary aggregates M1B had negative cyclical movements.