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Taiwan Economy Shows Steady Growth

Taiwan Economy Shows Steady Growth
Taiwan Economy Shows Steady Growth

The recovery in Taiwan’s economy has become “firmly rooted” after the country’s index of economic monitoring indicators continued to show steady growth in November, according to an analysis by Standard Chartered Bank.

The National Development Council, Taiwan’s economic planning body, said Dec. 26 that its monitoring indicators index rose by one point to 25 in November, flashing a green light and signaling steady growth, Taiwan Focus reported.

The council uses a five-color system to gauge economic health, with red signaling overheating, yellow-red showing slight overheating, yellow-blue signaling a slowdown and blue indicating recession.

“It remains in the green zone, signifying a steady growth outlook as expected for 10 straight months, the longest period since 2007-2008, supporting our view the economy is firmly on the recovery track as well as in better shape (than) in 2010-2011,” Tony Phoo, a Taipei-based economist at Standard Chartered, wrote in a research note on Dec. 26.

The government data showed that five out of the nine sub-indicators were in the green in November, including steady growth in monetary data, equity, industrial production, exports and manufacturing sales.

Phoo added that data on electrical and machinery imports rose to a yellow-red color to show slight overheating in November, in line with Standard Chartered’s view that improving demand visibility has lifted business confidence and boosted local companies’ capital expenditure and hiring.

Moreover, the November data showed that overall growth prospects will remain optimistic into early 2015, while the recent sharp fall in international oil prices has also put a lid on local inflation, according to the economist.

Phoo has projected that Taiwan’s real gross domestic product (GDP) will show 3.9 percent growth for 2014 on resilient domestic activity and increase further at 4.3 percent in 2015.

 Composite Score

The composite score for the monitoring indicator gained one point to 25, with the leading indicator continuing a downward trend for nine months and capping the accumulated fall at 1 percent. At the same time, the coincident indicator rose for 15 months in a row.

Among the indicator’s nine components, customs-cleared exports and imports of machinery and equipment both gained one point, with the signals switching from yellow-blue to green and green to yellow-red, respectively. But industrial output lost one point and changed signal from yellow-red to green.

Indicators for monetary aggregates M1B, producers’ shipments for manufacturing and TAIEX average closing price continued green. The manufacturing composite indicator, nonagricultural employment and sales of trade and food services remained yellow-blue.

The official said the NDC is cautiously optimistic about the outlook on the strength of a better global economy projected for next year and ongoing investment by the local semiconductor sector.

 

 

Financialtribune.com