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.”

Lead­ing In­di­ca­tors

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.

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