Economic indictor flashed 7th consecutive "green light" in February

This article was published by the Taiwan Headlines on April 4, 2006. It reports that according to the Council for Economic Planning and Development, the monitoring indicator for Taiwan's economic performance flashed a "green" light for the seventh consecutive month in February 2006.

The monitoring indicator measures the economic prospects for the next three months. In February 2006, it edged up 0.1 percent from the previous month, to 109.6. The increase was mainly due to the continuing rise of exports and orders received for the month. Among the seven factors that form the monitoring indicator, new orders for the manufacturing industry, exports by Customs and the wholesale price index all showed positive contribution.

In addition to the monitoring indicator, a related coincident indicator accesses the economic climate in a given month. In February 2006, this coincident indicator fell by 0.5 percent from the previous month, to 114.2. Among the six components that constitute the coincident indicator, only average monthly wages and salaries experienced a slight growth. The remaining five components all witnessed a decline, including those for industrial production index, manufacturing production index, manufacturing sales, bank clearings, and the quantum rating for domestic traffic.

The aforementioned to indicators are results of a survey conducted by the Council for Economic Planning and Development in February 2006. Among all the manufacturers surveyed, 30 percent said that they expected to see a better economic climate in the next three months - the highest level in two years. About 11 percent of these manufacturers anticipated a worse economic climate.

According to the Council for Economic Planning and Development, Taiwan's economy in 2006 is still influenced by some uncertain factors, including possible avian flu outbreak, continuing international oil price hike, and a fragile consumer finance market caused by worsening bad cash- and credit-card loans. It is expected that the bad cash- and credit-card loans will influence Taiwan's economic growth in 2006 by merely 0.2 percent. The reduction of private consumption caused by the tight credit policy recently adopted by banks is estimated to be NT$15-20 billion (US$441.18-588.24 million).

In related news, according to the Taiwan Institute of Economic Research, Taiwan's service sector experienced a considerable drop in its sales in February 2006. Service industries such as retailing, securities, transportation and wholesaling all reported a drop of 10 percent to 20 percent in business during the month. The declines are likely to be the result of the tight credit imposed on cash- and credit-card holders by banks in order to prevent bad card loans from worsening.