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2018.1.25
The 2018 world economic growth is predicted to outperform 2017
TIER adjusts its forecast for Taiwan's GDP growth in 2018 upward

The Taiwanese Economy in December 2017

Major global institutes such as the World Bank, Global Insight Institute, and International Monetary Fund simultaneously forecast the 2018 world economic growth will be better than the growth of 2017. As a result, the Taiwan Institute of Economic Research (TIER) adjusts its forecast for Taiwan's GDP growth in 2018 upward to be 2.34%.
Taiwan's exports in December 2017 increased significantly by only 14.84% compared with the same month of 2016 that would also be the 15th month of positive growth in exports. Regarding imports, Taiwan's imports in December 2017 increased by 12.19% compared with imports in December 2016. Exports and imports grew by 13.22% and 12.55% y-o-y respectively from January 1st till the end of December last year, Taiwan's exports and imports gave a trade surplus of US$ 57.88 billion or an increase by 16.34% on a y-o-y basis during the entire year.
Taiwan's consumer price index (CPI) went up by only 1.21% in December 2017 compared with the same month of previous year. The core inflation rate stood at 1.57% in December, 2017. In addition, the wholesale price index (WPI) moved up by 0.24% in December 2017 on the year-on-year basis. On the cumulative basis, the CPI and WPI went up by 0.62% and 0.90% respectively for the entire year of 2017 compared with 2016.
As for exchange rate, the NTD went stronger due to the relatively weaker USD, as the Fed had sent out its certain dovish messages and hot money continued to flow in. Anyway, the NTD/USD stood at 29.848 in late December 2017 indicating a 0.54% appreciation. Regarding the interest rate, it remained low and steady in December 2017 due to the continued loose monetary operations by the CBC with respect to the most recent CPI reading and relatively strong NTD; the lowest and highest over-night call rate in December 2017 stood at 0.173% and 0.184% respectively.

Business Outlook

The portion of manufacturing firms who perceived business were better than expected in the target month was 27.2% or increased by 3.2 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 30.6% or increased by 9.7 percentage points than 20.9% perceiving worse business of the previous month. The portion of manufacturing firms who perceived business remained constant in the target month was 42.2% or decreased by 12.9 percentage points compared with 55.1% perceiving constant business in the previous month. Overall, manufacturing firms perceived the business in the target month was rather modest.
In addition, the portion of manufacturers who perceived business would be better in the next six months was 26.6% in the target month or increased by 4.1 percentage points than 22.5% feeling more optimistic about the future in the previous month. The portion of firms who perceived the economic outlook would be worsening was 18.1% or increased by 1.4 percentage points compared with 16.7% 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 55.3% or decreased by 5.5 percentage points compared with 60.8% feeling neutral about the business outlook one month earlier. Overall, manufacturing firms perceived the business in the near future was also quite modest.
The manufacturing composite indicator for December, 2017 adjusted for seasonal factors on moving average, saw a downward correction, and from a revision of as 99.87 points in November moved down to 99.02 points in December that would be the fourth month consecutive drop. Figure 1 shows a decrease of 0.85 points.
The TIER service sector composite indicator for December 2017 adjusted for seasonal factors on moving average, saw an upward correlation, and from a revision of as 89.80 points in November moved up to 92.48 points in December that would also be the first increase after three-month consecutive drop. Figure 1 shows an increase of 2.68 points.
In addition, the TIER Construction Sector Composite Indicator for December 2017 adjusted for seasonal factors on moving average also saw an upward correction, and from a revision of 100.43 points in November went up to 104.01 points in December. Figure 1 shows an increase of 3.58 points, the second month of consecutive increase.

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

 

TIER Forecast (issued on 25th January, 2018.)
(NT$100 million, Chained (2011) Dollars)

 

 

 
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