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2018.5.25
Is surging commodity price a new uncertainty?
Taiwan's recovery seems not as strong as earlier

The Taiwanese Economy in April 2018

The surging commodity price is a major concern in the world at current stage as the global economy has not yet fully recovered. Major economies have grown slower than last year with the exception, the United States of America. As a result, the manufacturing composite indicator issued by the Taiwan Institute of Economic Research has shown some deceleration.
Taiwan's exports in April 2018 increased significantly by 10.0% compared with the same month of 2017. Regarding imports, Taiwan's imports in April 2018 increased by 4.9% compared with imports in April 2017. Exports and imports grew by 10.5% and 9.4% y-o-y respectively from January 1st till the end of April this year, Taiwan's exports and imports gave a trade surplus of US$ 1.59 billion or an increase by 16.9% on a y-o-y basis during the entire year.
Taiwan's consumer price index (CPI) went up by 1.98% in April 2018 compared with the same month of previous year. The core inflation rate stood at 1.30% in April, 2018. In addition, the wholesale price index (WPI) moved up by 2.53% in April 2018 on the year-on-year basis. On the cumulative basis, the CPI went up by 1.65% and WPI went down 0.53% from January 1st till April 30th 2018 compared with the same period last year.
As for exchange rate, the NTD went weaker due to the relatively stronger USD, as the Fed had sent out its certain hawkish messages and hot money continued to flow out. Anyway, the NTD/USD stood at 29.61 in late April 2018 indicating a 1.67% depreciation. Regarding the interest rate, it remained low and steady in April 2018 due to the continued loose monetary operations by the CBC with respect to the most recent CPI reading and potential global uncertainties; the lowest and highest over-night call rate in April 2018 stood at 0.176% and 0.189% respectively.

Business Outlook

The portion of manufacturing firms who perceived business were better than expected in the target month was 28.7% or decreased by 21.1 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 27.4% or increased by 17.1 percentage points than 10.3% perceiving worse business of the previous month. The portion of manufacturing firms who perceived business remained constant in the target month was 43.8% or increased by 3.9 percentage points compared with 39.3% perceiving constant business in the previous month. Overall, manufacturing firms perceived the business in the target month was rather pessimistic.
In addition, the portion of manufacturers who perceived business would be better in the next six months was 35.6% in the target month or increased by 5.9 percentage points than 29.7% feeling more optimistic about the future in the previous month. The portion of firms who perceived the economic outlook would be worsening was 11.9% or increased by 4.7 percentage points compared with 7.2% 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 52.5% or decreased by 10.6 percentage points compared with 63.1% feeling neutral about the business outlook one month earlier. Overall, manufacturing firms perceived the business in the near future was somewhat neutral.
The manufacturing composite indicator for April, 2018 adjusted for seasonal factors on moving average, saw a downward correction, and from a revision of as 100.02 points in MaRCH moved down to 98.32 points in April. Figure 1 shows a decrease of 1.70 points, the first decrease after previous increase.
The TIER service sector composite indicator for April, 2018 adjusted for seasonal factors on moving average, however saw an upward correlation, and from a revision of as 94.55 points in March moved up to 95.0 points in April. Figure 1 shows an increase of 0.45 points, a consecutive two-month increase.
In addition, the TIER Construction Sector Composite Indicator for April 2017 adjusted for seasonal factors on moving average nevertheless saw a downward correction, and from a revision of 98.06 points in March went down to 95.22 points in April. Figure 1 shows a decrease of 2.84 points, a third month consecutive decline.

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:
Leather, Fur and Allied Product Manufacturing, Petroleum and Coal Products Manufacturing, Screw, Nut Manufacturing, Metal Structure and Architectural Components Manufacturing, Transport Equipment Manufacturing and Repairing
 
● Manufacturers' sentiments that have been in decline in the April survey, but are expected to improve over the next six months include:
Prepared Animal Feeds Manufacturing, Bicycles Parts Manufacturing, Banks, Securities, Insurance
 
● Manufacturers' sentiments that have been in decline in the April survey and are expected to remain sluggish over the next six months include:
Frozen Food Manufacturing, Electric Wires and Cables Manufacturing, Motor Parts Manufacturing
 
● 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:
Yarn Spinning Mills, Porcelain and Ceramic Products Manufacturing, Motor Vehicles Manufacturing, Wholesale
 
● 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:
Food, Edible Oil Manufacturing, Flour Milling and Grain Husking , Soft Drink Manufacturing , Industrial Chemicals, Petrochemicals Manufacturing, Man-made Fibers Manufacturing, Rubber Products Manufacturing, Industrial Machinery, Electronic Machinery, Audio and Video Electronic Products Manufacturing, Data Storage Media Units Manufacturing and Reproducing, Electronic Parts and Components Manufacturing, Bicycles Manufacturing, Precision Instruments Manufacturing, Education and Entertainment Articles Manufacturing, 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, Slaughtering, Textiles Mills, Fabric Mills , Apparel, Clothing Accessories and Other Textile Product Manufacturing , Paper Manufacturing, Chemical Products Manufacturing, Plastic Products Manufacturing, Cement and Cement Products Manufacturing, Iron and Steel Basic Industries, Fabricated Metal Products Manufacturing, Machinery and Equipment Manufacturing and Repairing, Electrical Machinery, Electrical Machinery, Supplies Manufacturing and Repairing, Motorcycles Manufacturing, Motorcycles Parts Manufacturing, Construction, Basic Civil Structure Construction, Real Estate Investment, Retail Sales, Restaurants and Hotels, Telecommunication Services
 
● Manufacturers' sentiments that have improved in the April survey and is expected to deteriorate over the next six months include:
Electrical Appliances and Housewares Manufacturing
 
● Manufacturers' sentiments that have improved in the April survey and is expected to remain upbeat over the next six months include:
Plastics and Rubber Raw Materials, Metal Dies, Communications Equipment and Apparatus Manufacturing
 
● Manufacturers' sentiments that have improved in the April survey and the trend is expected to continue for the next six months include:
Non-metallic Mineral Products Manufacturing, Glass and Glass Products Manufacturing, Cutlery and Tools Manufacturing.

 

 

 
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