The Taiwanese Economy in March 2019

The global demand has turned weaker, whereas world major central banks simultaneously adopt looser monetary operations. The Taiwan Institute of Economic Research (TIER) issued its most recent composite indicators for manufacturing and service. Both indicators go up due to more promising domestic investment activities despite of deteriorating global economic conditions. As a result, TIER predicts that the Taiwan's GDP will grow by 2.12% this year, stable with its previous forecast.
Taiwan's exports in March 2019 decreased by 4.36% compared with the same month of 2018, and it is the 5th-month consecutive decrease. Regarding imports, Taiwan's imports in March 2019 increased by 6.62% compared with imports in March 2018. On the cumulated basis, exports and imports from January till the end of March this year gave a trade surplus of US$ 8.96 billion or decreased by 23.75% on a y-o-y basis.
Taiwan's consumer price index (CPI) increased by 0.58% in March 2019 compared with the same month of previous year. The core inflation rate excluding prices of the energy and food grew by 0.47% in March 2019. In addition, the wholesale price index (WPI) moved up by 1.19% in March 2019 on the year-on-year basis.
As for exchange rate, the NTD similar to all other major currencies in the world went somewhat weaker due to the relatively stronger USD. The NTD/USD stood at 30.825 in late March 2019 indicating a 0.16% depreciation. Regarding the interest rate, it remained low and steady in March 2019 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 March 2019 stood at 0.174% and 0.186% respectively.

Business Outlook

The portion of manufacturing firms who perceived business were better than expected in the target month was 46.5% or increased by 35.0 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 11.6% or decreased by 38.5 percentage points than 50.1% perceiving worse business of the previous month. The portion of manufacturing firms who perceived business remained constant in the target month was 41.9% or increased by 3.5 percentage points compared with 38.4% perceiving constant business in the previous month. Overall, manufacturing firms perceived the business in the target month was more optimistic than the previous month. However, the true reason was because of more working days in March compared with February with the lunar new year break.
In addition, the portion of manufacturers who perceived business would be better in the next six months was 32.8% in the target month or decreased by 12.8 percentage points than 45.6% feeling more optimistic about the future in the previous month. The portion of firms who perceived the economic outlook would be worsening was 15.5% or increased by 6.2 percentage points compared with 9.3% 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 51.7% or increased by 6.6 percentage points compared with 45.1% feeling neutral about the business outlook one month earlier. Overall, manufacturing firms perceived the business in the near future was more pessimistic than the previous month.
The manufacturing composite indicator for March 2019 adjusted for seasonal factors on moving average, saw an upward correction, and from a revision of as 91.23 points in February 2019 moved up to 95.93 points. Figure 1 shows an increase of 4.70 points, the fourth month of consecutive increase.
The TIER service sector composite indicator for March 2019 adjusted for seasonal factors on moving average, also saw an upward correlation, and from a revision of as 91.25 points in February 2019 moved up to 96.76 points. Figure 1 shows an increase of 5.51 points, the first increase after a one-month drop.
In addition, the TIER Construction Sector Composite Indicator for March 2019 adjusted for seasonal factors on moving average, saw a downward correction, and from a revision of 94.13 points in February 2019 went down to 91.18 points. Figure 1 shows a decrease of 2.95 points, the first decrease after a one-month mount.

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 March survey and are expected to deteriorate over the next six months include:
Cutlery and Tools Manufacturing, Motor Vehicles Manufacturing, Motorcycles Manufacturing.
　
● Manufacturers' sentiments that have been in decline in the March survey, but are expected to improve over the next six months include:
None.
　
● Manufacturers' sentiments that have been in decline in the March survey and are expected to remain sluggish over the next six months include:
Food, Electronic Machinery, Motor Parts Manufacturing.
　
● Manufacturers surveyed who felt the March outlook was the same as the previous month, but the outlook is expected to exacerbate over the next six months include:
Porcelain and Ceramic Products Manufacturing, Glass and Glass Products Manufacturing, Machinery and Equipment Manufacturing and Repairing, Industrial Machinery, Motorcycles Parts Manufacturing.
　
● Manufacturers surveyed who felt the March outlook was the same as the previous month, but the outlook is expected to improve over the next six months include:
Printing, Precision Instruments Manufacturing.
　
● Manufacturers surveyed who felt the March outlook was the same as the previous month and the trend is expected to continue for the next six months include:
Manufacturing, 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 , Leather, Fur and Allied Product Manufacturing, Wood and Bamboo Products Manufacturing, Paper Manufacturing, Man-made Fibers Manufacturing, Electric Wires and Cables Manufacturing, Transport Equipment Manufacturing and Repairing, Construction, Basic Civil Structure Construction, Real Estate Investment, Restaurants and Hotels, Telecommunication Services, Transportation and Storage.
　
● Manufacturers' sentiments that have improved in the March survey and is expected to deteriorate over the next six months include:
Industrial Chemicals, Petrochemicals Manufacturing, Petroleum and Coal Products Manufacturing.
　
● Manufacturers' sentiments that have improved in the March survey and is expected to remain upbeat over the next six months include:
Chemical Products Manufacturing, Non-metallic Mineral Products Manufacturing, Cement and Cement Products Manufacturing, Electrical Appliances and Housewares Manufacturing, Communications Equipment and Apparatus Manufacturing, Electronic Parts and Components Manufacturing, Bicycles Manufacturing, Bicycles Parts Manufacturing, Banks, Insurance.
　
● Manufacturers' sentiments that have improved in the March survey and the trend is expected to continue for the next six months include:
Slaughtering, Prepared Animal Feeds Manufacturing, Fabric Mills , Plastics and Rubber Raw Materials, Rubber Products Manufacturing, Plastic Products Manufacturing, Iron and Steel Basic Industries, Fabricated Metal Products Manufacturing, Metal Dies, Screw, Nut Manufacturing, Metal Structure and Architectural Components Manufacturing, Electrical Machinery, Electrical Machinery, Supplies Manufacturing and Repairing, Audio and Video Electronic Products Manufacturing, Data Storage Media Units Manufacturing and Reproducing, Education and Entertainment Articles Manufacturing, Retail Sales, Wholesale, Securities.

TIER Forecast (issued on 25th April, 2019.)
(NT$100 million, Chained (2011) Dollars)