Taiwan economy remains sluggish; leading indicators drop further

CNA file photo

TAIPEI (CNA) — Taiwan’s economy remained sluggish in April due to the impact of the COVID-19 coronavirus pandemic, with industrial production, sales and retail/wholesale revenue all weakening, the National Development Council (NDC) said Wednesday.

The disease also made many people in Taiwan more cautious, sending the leading indicators, which predict economic performance over the next three to six months, down for the sixth consecutive month in April, the NDC said.

The composite index of monitoring indicators, which reflect the existing economic situation, remained in the yellow-blue light category after falling by one point from a month earlier to 19 in April, according to data compiled by the NDC, Taiwan’s top economic planning agency.

The NDC uses a five-color system to gauge the country’s economic performance, with blue indicating economic recession, yellow-blue representing sluggishness, green signifying stable growth, yellow-red referring to a warming economy and red pointing to overheating.

Of the nine factors in the composite index, the sub-index on sales generated by the manufacturing sector flashed yellow-blue in April, compared with green in March, while the sub-index on revenue in the wholesale, retail and food/beverage sector flashed blue in April, a downgrade from a green light recorded in March, the NDC said.

The sub-index on industrial production flashed green in April, compared with yellow-red a month earlier, while the sub-indexes on non-farm payrolls, merchandise exports and business among manufacturers continued to flash blue, the NDC added.

In April, the sub-indexes on equity price changes and money supply continued to flash yellow-blue and green, respectively, while the sub-index on imports of machinery and electrical equipment flashed red, an upgrade from yellow-blue from a month earlier, according to the NDC.

Wu Ming-hui (吳明蕙), head of the NDC’s Department of Economic Development, said the spread of COVID-19 has hurt global demand which in turn hurt Taiwan’s export-oriented economy.

The silver lining was that the local electronics sector got a boost from rising demand for emerging technologies such as 5G and the Internet of Things, while online learning and remote work also led to higher demand for Taiwan-made notebook computers and servers, Wu said.

In April, the leading indicators fell 1.94 percent from a month earlier, the steepest drop in the past six months, in which the aggregate decline totaled 6.92 percent.

Wu said the latest indicators showed weakening confidence in the local economy amid the pandemic.

However, Wu said the government is preparing measures to stimulate consumption and push for investment, which is expected to stabilize the economy.