Full upturn not expected until H2 2012: TIER

The China Post news staff & CNA

The China Post news staff & CNA–Taiwan’s economy is not expected to see a full upturn until the second half of the year, as it will bottom out in the first quarter and gradually pick up in the second quarter, the Taiwan Institute of Economic Institute (TIER) predicted yesterday. A monthly survey released yesterday by the TIER showed that Taiwan’s manufacturing sector held greater optimism in January than last December toward the economic outlook for the next six months. The survey showed that 45.6 percent of businesses held a positive outlook for the economy in the next six months, up 18.4 percentage points from the previous month.

The poll showed that 13.6 percent held a bearish view in January, a decline of 20.6 percentage points. However, TIER also found that only 12.4 percent of companies considered the business climate in January good, a 4.7 percentage point drop from the previous month.

Meanwhile, 48.7 percent of companies felt the business climate was poor in January, 4.8 percentage points higher than last December. Based on these results, TIER said the business climate index for the manufacturing sector in January rose 1.2 points to 89.78 points, the first monthly increase since July 2011. The index for the service sector also rose for the first time since May 2011, climbing 2.46 points to 90.11 points, TIER said. TIER President David Hong said the lack of any new negative developments in the European debt crisis had led to the positive outlook among local businesses, despite the poor performance in exports in January. When asked if the uptick of the index meant the manufacturing sector had rebounded, Gordon Sun, director of TIER’s macroeconomics forecasting center, said that cannot be determined by just one month’s figure. Since the Lunar New Year holiday fell in January this year, Sun said, conclusions on whether there was a rebound should not be drawn before considering the data for February as well as January. TIER has forecast that Taiwan’s economy will bottom out in the first three months of this year. The tallies indicated that the industries of electronic parts and components, basic metals and chemical materials all saw their production in January decline from a year earlier. Production of electronics parts and components suffered an annual drop of 14.47 percent in January, due partly to a slowdown in the global economic growth and fewer working days in the month for the Chinese New Year holiday.

The basic metal sector posted an annual production shrinkage of 17 percent in January, as quite a few steel makers suspended their production in the month to cushion the impact of the European debt crisis and sluggish global steel market demand. As to chemical materials, production also witnessed an annual decline of 10.58 percent in January, which, however, was down from last December’s 10.76 percent drop and November’s 10.98 percent decline. MOEA officials forecast Taiwan’s manufacturing production index to post an annual increase of 5 to 6 percent in February.