Taiwan’s economy shows stable growth for the 3rd straight month in March

Taipei, April 26 (CNA) An index giving an overview of Taiwan’s economy flashed a “green light” for a third consecutive month in March, indicating continued stable growth, the National Development Council (NDC) said Friday.

Another index of leading indicators assessing the state of the economy over the next three to six months also moved higher for a sixth month in a row, according to the NDC, Taiwan’s top economic planning body.

The composite index of economic indicators rose one point from a month earlier to 30 in March, keeping the index in the “green light” category ranging between 23 and 31. The March figure was the highest in two years.

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

Wu Ming-hui (吳明蕙), head of the NDC’s Department of Economic Development, said the March composite index showed the local economy continuing to improve as the index rose to the higher end of the green light category.

Among the nine factors in the March composite index, the sub-indexes for money supply, retail, wholesale and food/beverage industry sales, and imports of machinery and electrical equipment all moved higher from a month earlier in March.

The sub-indexes for industrial production and overtime hours in the industrial and service sectors fell in March from a month earlier, while the sub-indexes for stock price changes, exports, manufacturing sector sales and business sentiment among manufacturers remained unchanged, according to NDC data.

“Most of the nine factors in the March composite indicators index flashed a green light or improved in March, showing that the local economic recovery remained on track,” Wu said.

In March, the leading indicators index rose 0.32 percent from a month earlier, according to the NDC.

The leading indicator sub-indexes for export orders, money supply, stock price changes, business sentiment among manufacturers, and employment improved in March, while those for floor space of new construction and semiconductor imports fell, the NDC said.

During the six months to March, the leading indicators rose 2.26 percent, but aggregate growth was capped by global economic uncertainties such as geopolitical unease and escalating tensions between the United States and China, Wu said.

Wu said the March index of coincident indicators, which assesses current economic conditions, was also “encouraging,” up 0.64 percent from a month earlier in March as the sub-indexes for all seven factors moved higher from a month earlier.

According to the NDC, the seven factors are industrial production, manufacturing sector sales, machinery and electrical equipment imports, power consumption by enterprises, exports, retail, wholesale and food and beverage sales, and overtime hours in the industrial and service sectors.

The coincident indicators moved higher for a 12th consecutive month in March, growing over that time by about 7.3 percent, Wu said.

“While the global economy remains haunted by uncertainties, Taiwan’s export-oriented economy is expected to receive a boost from emerging technologies such as artificial intelligence applications,” Wu said.

“With more and more research institutions upgrading their forecasts of Taiwan’s 2024 economic growth forecasts, we have faith that local economic growth will top 3 percent this year,” Wu added.

There are concerns, however, that export growth will be concentrated in the tech industry and that old economy industries will have their momentum capped by such factors as production gluts in China, Wu said.

The Taiwan Institute of Economic Research (TIER) is the latest institute to join the growing list of organizations that have revised upwards their forecasts for Taiwan’s gross domestic product growth.

On Thursday, the TIER raised its estimate for 2024 growth by 0.14 percentage points from a forecast in January to 3.29 percent.