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2017.11.24
Global recovery continues on a good drive
Taiwan's recovery taking a short break

The Taiwanese Economy in October 2017

The US and European economy both did very well in the third quarter of this year. The Chinese economy slowed down a little bit compared with the growths of previous two quarters; however, its economic performance is still better than the market expectation. As a result, the Global Insight Institute adjusted its forecast for this year's global GDP growth upward. The improved global economic conditions did help pick up Taiwan's growth especially in exports; nevertheless, the momentum has come to an end, whereas Taiwan's recovery is taking a short break. The export growth in October was not as strong as earlier months due to base effect.
Taiwan's exports in October 2017 increased by only 3.0% compared with the same month of 2016 that would be the 13th month of positive growth in exports. Regarding imports, Taiwan's imports in October 2017 increased by 0.13% compared with imports in October 2016. Exports and imports grew by 12.95% and 12.99% y-o-y respectively from January 1st till the end of October this year, Taiwan's exports and imports gave a trade surplus of US$ 45.78 billion or an increase by 12.81% on a y-o-y basis during this period.
Taiwan's consumer price index (CPI) went down by 0.32% in October 2017 compared with the same month of previous year. The core inflation rate stood at 1.13% in October, 2017. In addition, the wholesale price index (WPI) moved up by 1.58% in October 2017 on the year-on-year basis. On the cumulative basis, the CPI and WPI went up by 0.59% and 0.89% respectively compared with the same period of last year.
As for exchange rate, the NTD went somewhat stronger due to the relatively weaker USD, as the Fed had sent out certain dovish messages. Anyway, the NTD/USD stood at 30.17 in late October 2017 indicating a 0.45% appreciation. Regarding the interest rate, it remained low and steady in October 2017 due to the continued loose monetary operations by the CBC with respect to the most recent CPI reading; the lowest and highest over-night call rate in October 2017 stood at 0.175% and 0.189% respectively.

Business Outlook

The portion of manufacturing firms who perceived business were better than expected in the target month was 26.5% or decreased by 3.9 percentage points 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 26.6% or increased by 5.4 percentage points than 21.2% perceiving worse business of the previous month. The portion of manufacturing firms who perceived business remained constant in the target month was 47.0% or decreased by 1.4 percentage points compared with 48.4% perceiving constant business in the previous month. Overall, manufacturing firms perceived the business in the target month was neutral to somewhat pessimistic.
In addition, the portion of manufacturers who perceived business would be better in the next six months was 21.5% in the target month or increased by 3.0 percentage points than 18.5% feeling more optimistic about the future in the previous month. The portion of firms who perceived the economic outlook would be worsening was 16.7% or increased by 1.3 percentage points compared with 15.4% 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 61.8% or decreased by 4.3 percentage points compared with 66.1% feeling neutral about the business outlook one month earlier. Overall, manufacturing firms perceived the business in the near future was quite neutral.
The manufacturing composite indicator for October, 2017 adjusted for seasonal factors on moving average, saw a downward correction, and from a revision of as 101.66 points in September moved down to 100.69 points in October that would be the second month consecutive drop. Figure 1 shows a decrease of 0.97 points.
The TIER service sector composite indicator for October 2017 adjusted for seasonal factors on moving average, also saw a downward correlation, and from a revision of as 93.28 points in September moved down to 91.05 points in October that would also be the second month consecutive drop. Figure 1 shows a decrease of 2.23 points.
In addition, the TIER Construction Sector Composite Indicator for October 2017 adjusted for seasonal factors on moving average saw a downward correction, and from a revision of 95.81 points in September went down to 93.40 points in October. Figure 1 shows a decrease of 2.41 points, the first dip after a one-month hike.

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 October survey and are expected to deteriorate over the next six months include:
  Plastic Products Manufacturing, Motorcycles Manufacturing, Basic civil structure construction.
   
● Manufacturers' sentiments that have been in decline in the October survey, but are expected to improve over the next six months include:
  Plastics and rubber raw materials.
   
● Manufacturers' sentiments that have been in decline in the October survey and are expected to remain sluggish over the next six months include:
  Leather, Fur and Allied Product Manufacturing, Wood and Bamboo Products Manufacturing, Printing, Porcelain and Ceramic Products Manufacturing, Glass and Glass Products Manufacturing, Metal Structure and Architectural Components Manufacturing, Electrical Machinery, Electrical Machinery, Supplies Manufacturing and Repairing, Electrical Appliances and Housewares Manufacturing, Motorcycles Parts Manufacturing, Bicycles Manufacturing, Bicycles Parts Manufacturing, Education and Entertainment Articles Manufacturing, Construction, Real estate investment, Insurance.
   
● Manufacturers surveyed who felt the October outlook was the same as the previous month, but the outlook is expected to exacerbate over the next six months include:
  Data Storage Media Units Manufacturing and Reproducing.
   
● Manufacturers surveyed who felt the October outlook was the same as the previous month, but the outlook is expected to improve over the next six months include:
  Non-metallic Mineral Products Manufacturing, Cement and Cement Products Manufacturing, Iron and Steel Basic Industries.
   
● Manufacturers surveyed who felt the October outlook was the same as the previous month and the trend is expected to continue for the next six months include:
  Manufacturing, Food, Slaughtering, Frozen Food Manufacturing, Edible Oil Manufacturing, Flour Milling and Grain Husking , Soft Drink Manufacturing , Prepared Animal Feeds Manufacturing, Textiles Mills, Yarn Spinning Mills, Fabric Mills , Apparel, Clothing Accessories and Other Textile Product Manufacturing , Industrial Chemicals, Petrochemicals Manufacturing, Man-made Fibers Manufacturing, Chemical Products Manufacturing, Petroleum and Coal Products Manufacturing, Rubber Products Manufacturing, Fabricated Metal Products Manufacturing, Metal dies, Screw, Nut Manufacturing, Electric Wires and Cables Manufacturing, Electronic Machinery, Communications Equipment and Apparatus Manufacturing, Electronic Parts and Components Manufacturing, Transport Equipment Manufacturing and Repairing, Motor Parts Manufacturing, Wholesale, Banks, Securities, Telecommunication services, Transportation and storage.
   
● Manufacturers' sentiments that have improved in the October survey and is expected to deteriorate over the next six months include:
  Audio and Video Electronic Products Manufacturing, Restaurants and hotels.
   
● Manufacturers' sentiments that have improved in the October survey and is expected to remain upbeat over the next six months include:
  Paper Manufacturing, Machinery and Equipment Manufacturing and Repairing, Cutlery and tools Manufacturing, Industrial Machinery, Precision Instruments Manufacturing.
   
● Manufacturers' sentiments that have improved in the October survey and the trend is expected to continue for the next six months include:
Motor Vehicles Manufacturing, Retail sales.

 

 

 
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