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2017.5.25
Cyclical recovery of the world economy continues
TIER composite indicators suggest Taiwan's growth turn tepid

The Taiwanese Economy in April 2017

Despite the fact that the first quarter of US economy's performance this year is not as cheerful as previous quarters, the world economy in general is continuing its cyclical recovery. However, Taiwan's growth of recovery may turn tepid according to the composite indicators recently issued by the Taiwan Institute of Economic Research (TIER).
Taiwan's exports in April 2017 increased by 9.39% compared with the same month of 2016. Regarding imports, Taiwan's imports in April 2017 increased by 23.5% compared with imports in April 2016. From January 1st till the end of April this year, Taiwan's exports and imports gave a trade surplus of US$ 13.57 billion or a decrease by 20.32% on a y-o-y basis.
Taiwan's consumer price index (CPI) went up by 0.12% in April 2017 compared with the same month of previous year. The current inflation rate has gradually moved back down compared with previous months. The core inflation rate stood at a relatively more heated ratio as 1.01% in April, 2017. In addition, the wholesale price index (WPI) increased by 1.12% in April 2017 on the year-on-year basis. Basically, the annual increasing ratio of WPI has exceeded the ratio of CPI that indicates corporate profits on average have been squeezed.
As for exchange rate, the NTD went somewhat stronger due to the relatively weaker USD as well as flowing-in capital in April 2017 due to the issue of common reporting standards (CRS) by the OECD. The USD/NTD stood at 30.219 in late April 2017 indicating a 0.39% appreciation. Regarding the interest rate, it remained low and steady in April 2017 due to the continued loose monetary operations by the CBC with respect to the most recent CPI reading.

Business Outlook

The portion of manufacturing firms who perceived business were better than expected in the target month was 11.8% or decreased by 35.2% compared with respondents who perceiving better business in the previous month. The portion of those perceived business were getting worse in the target month was 42.3% or increased by 26.8 percentage points than 15.5% perceiving worse business of the previous month. The portion of manufacturing firms who perceived business remained constant in the target month was 45.9% or increased by 8.4 percentage points compared with 37.5% perceiving constant business in the previous month. Overall, manufacturing firms perceived the business in the target month was pessimistic.
In addition, the portion of manufacturers who perceived business would be better in the next six months was 36.1% in the target month or increased by 7.1 percentage points than 29.0% feeling more optimistic about the future in the previous month. The portion of firms who perceived the economic outlook would be worsening was 13.3% or decreased by 2.3 percentage points compared with 15.6% feeling rather pessimistic about the future in the previous month. The portion of manufacturing firms who perceived business remained constant in the next six months stood at 50.6% or decreased by 4.8 percentage points compared with 55.4% feeling neutral about the business outlook one month earlier. Overall, manufacturing firms perceived the business in the near future was neutral to somewhat optimistic.
The manufacturing composite indicator for April, 2017 adjusted for seasonal factors on moving average, saw a downward correction, and from a revision of as 97.88 points in March moved down to 95.61 points. Figure 1 shows a decrease of 2.27 points.
The TIER service sector composite indicator for April 2017 adjusted for seasonal factors on moving average remained constant at 91.83 points, the same level as at March 2017.
In addition, the TIER Construction Sector Composite Indicator for April 2017 adjusted for seasonal factors on moving average saw a downward correction, and from a revision of 89.93 points in March went down to 87.94 points. Figure 1 shows a decrease of 1.99 points.

Forecast on Individual Industries

Following are manufacturers' sentiments that are industry-specific in the monthly TIER surveys:

● Manufacturers' sentiments that have been in decline in the April survey and are expected to deteriorate over the next six months include:
Plastic Products Manufacturing, Porcelain and Ceramic Products Manufacturing, Iron and Steel Basic Industries, Data Storage Media Units Manufacturing and Reproducing.
 
● Manufacturers' sentiments that have been in decline in the April survey, but are expected to improve over the next six months include:
Cement and Cement Products Manufacturing, Communications Equipment and Apparatus Manufacturing, Bicycles Parts Manufacturing.
 
● Manufacturers' sentiments that have been in decline in the April survey and are expected to remain sluggish over the next six months include:
Industrial Chemicals, Petrochemicals Manufacturing, Plastics and rubber raw materials, Chemical Products Manufacturing, Petroleum and Coal Products Manufacturing, Rubber Products Manufacturing, Fabricated Metal Products Manufacturing, Metal dies, Screw, Nut Manufacturing, Metal Structure and Architectural Components Manufacturing, Electrical Machinery, Supplies Manufacturing and Repairing, Audio and Video Electronic Products Manufacturing, Transport Equipment Manufacturing and Repairing, Motor Vehicles Manufacturing, Motor Parts Manufacturing, Motorcycles Manufacturing, Motorcycles Parts Manufacturing, Bicycles Manufacturing, Construction, Basic civil structure construction, Real estate investment, Restaurants and hotels, Securities, Insurance.
 
● Manufacturers surveyed who felt the April outlook was the same as the previous month, but the outlook is expected to exacerbate over the next six months include:
Leather, Fur and Allied Product Manufacturing, Glass and Glass Products Manufacturing, Electrical Appliances and Housewares Manufacturing.
 
● Manufacturers surveyed who felt the April outlook was the same as the previous month, but the outlook is expected to improve over the next six months include:
Paper Manufacturing, Non-metallic Mineral Products Manufacturing, Electric Wires and Cables Manufacturing, Electronic Machinery, Electronic Parts and Components Manufacturing, Education and Entertainment Articles Manufacturing, Banks, Transportation and storage.
 
● Manufacturers surveyed who felt the April outlook was the same as the previous month and the trend is expected to continue for the next six months include:
Manufacturing, Food, Frozen Food Manufacturing, Edible Oil Manufacturing, Flour Milling and Grain Husking , Soft Drink Manufacturing , Textiles Mills, Yarn Spinning Mills, Apparel, Clothing Accessories and Other Textile Product Manufacturing , Wood and Bamboo Products Manufacturing, Printing, Machinery and Equipment Manufacturing and Repairing, Cutlery and tools Manufacturing, Industrial Machinery, Electrical Machinery, Retail sales, Wholesale, Telecommunication services.
 
● Manufacturers' sentiments that have improved in the April survey and is expected to deteriorate over the next six months include:
None.
 
● Manufacturers' sentiments that have improved in the April survey and is expected to remain upbeat over the next six months include:
Fabric Mills , Precision Instruments Manufacturing.
 
● Mnufacturers' sentiments that have improved in the April survey and the trend is expected to continue for the next six months include:
Slaughtering, Prepared Animal Feeds Manufacturing, Man-made Fibers Manufacturing.

 

 

 
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