The Taiwanese Economy in February 2019
The trade talk between the US and China is approaching a temporary
truce, whereas such progress has helped dismiss the global economic
uncertainty to some extent. The Taiwan Institute of Economic Research
(TIER) issued its most recent composite indicators for manufacturing
and service. The manufacturing indicator goes up due to the international
optimism in resolving the conflicts between the US and China. Nevertheless,
the service indicator goes down because of fewer working days when
cerebrating the lunar new year in February 2019.
Taiwan's exports in February 2019 decreased by 8.77% compared with
the same month of 2018. Regarding imports, Taiwan's imports in February
2019 decreased by 19.7% compared with imports in February 2018.
On the cumulated basis, exports and imports of January and February
this year gave a trade surplus of US$ 5.83 billion or decreased
by 4.09% on a y-o-y basis.
Taiwan's consumer price index (CPI) increased by 0.23% in February
2019 compared with the same month of previous year. The core inflation
rate excluding prices of the energy and food grew by 0.30% in February
2019. In addition, the wholesale price index (WPI) moved up by 0.80%
in February 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 30.775 in late February 2019 indicating
a 0.11% depreciation. Regarding the interest rate, it remained low
and steady in February 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 February 2019 stood at 0.176% and 0.194% respectively.
Business Outlook
The portion of manufacturing firms who perceived business were
better than expected in the target month was 11.5% or decreased
by 19.6 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 47.3% or increased
by 16.5 percentage points than 30.8% perceiving worse business of
the previous month. The portion of manufacturing firms who perceived
business remained constant in the target month was 41.1% or increased
by 3.0 percentage points compared with 38.1% perceiving constant
business in the previous month. Overall, manufacturing firms perceived
the business in the target month was more pessimistic than the previous
month.
In addition, the portion of manufacturers who perceived business
would be better in the next six months was 43.1% in the target month
or increased by 12.5 percentage points than 30.6% feeling more optimistic
about the future in the previous month. The portion of firms who
perceived the economic outlook would be worsening was 9.9% or decreased
by 8.4 percentage points compared with 18.3% 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 46.9% or decreased by 4.2 percentage points compared with
51.1% feeling neutral about the business outlook one month earlier.
Overall, manufacturing firms perceived the business in the near
future was more optimistic than the previous month.
The manufacturing composite indicator for February 2019 adjusted
for seasonal factors on moving average, saw an upward correction,
and from a revision of as 89.68 points in January 2019 moved up
to 91.29 points. Figure 1 shows an increase of 1.61 points, the
third month of consecutive increase.
The TIER service sector composite indicator for February 2019 adjusted
for seasonal factors on moving average, saw a downward correlation,
and from a revision of as 92.26 points in January 2019 moved down
to 92.05 points. Figure 1 shows a decrease of 0.21 points, the first
dip after two-month consecutive increase.
In addition, the TIER Construction Sector Composite Indicator for
February 2019 adjusted for seasonal factors on moving average, saw
an upward correction, and from a revision of 93.60 points in January
2019 went up to 94.04 points. Figure 1 shows an increase of 0.41
points, the first mount after a one-month 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 February
survey and are expected to deteriorate over the next six months
include:
Yarn Spinning Mills, Industrial Chemicals, Petrochemicals Manufacturing,
Porcelain and Ceramic Products Manufacturing, Glass and Glass Products
Manufacturing, Fabricated Metal Products Manufacturing, Metal Dies,
Screw, Nut Manufacturing, Machinery and Equipment Manufacturing
and Repairing, Cutlery and Tools Manufacturing, Industrial Machinery,
Data Storage Media Units Manufacturing and Reproducing, Motor Parts
Manufacturing, Motorcycles Parts Manufacturing.
● Manufacturers' sentiments that have been in decline in the February
survey, but are expected to improve over the next six months include:
Chemical Products Manufacturing, Cement and Cement Products Manufacturing,
Electric Wires and Cables Manufacturing, Electrical Appliances and
Housewares Manufacturing, Audio and Video Electronic Products Manufacturing,
Banks, Insurance.
● Manufacturers' sentiments that have been in decline in the February
survey and are expected to remain sluggish over the next six months
include:
Food, Slaughtering, Edible Oil Manufacturing, Flour Milling and
Grain Husking , Soft Drink Manufacturing , Prepared Animal Feeds
Manufacturing, Textiles Mills, Fabric Mills , Leather, Fur and Allied
Product Manufacturing, Plastics and Rubber Raw Materials, Man-made
Fibers Manufacturing, Rubber Products Manufacturing, Plastic Products
Manufacturing, Non-metallic Mineral Products Manufacturing, Iron
and Steel Basic Industries, Metal Structure and Architectural Components
Manufacturing, Electrical Machinery, Electronic Machinery, Electronic
Parts and Components Manufacturing, Motor Vehicles Manufacturing,
Bicycles Parts Manufacturing, Retail Sales, Wholesale, Telecommunication
Services.
● Manufacturers surveyed who felt the February outlook was the same
as the previous month, but the outlook is expected to exacerbate
over the next six months include:
Petroleum and Coal Products Manufacturing, Motorcycles Manufacturing.
● Manufacturers surveyed who felt the February outlook was the same
as the previous month, but the outlook is expected to improve over
the next six months include:
Precision Instruments Manufacturing.
● Manufacturers surveyed who felt the February 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, Apparel, Clothing Accessories
and Other Textile Product Manufacturing , Wood and Bamboo Products
Manufacturing, Paper Manufacturing, Electrical Machinery, Supplies
Manufacturing and Repairing, Communications Equipment and Apparatus
Manufacturing, Transport Equipment Manufacturing and Repairing,
Bicycles Manufacturing, Education and Entertainment Articles Manufacturing,
Construction, Basic Civil Structure Construction, Real Estate Investment,
Securities, Transportation and Storage.
● Manufacturers' sentiments that have improved in the February survey
and is expected to deteriorate over the next six months include:
None.
● Manufacturers' sentiments that have improved in the February survey
and is expected to remain upbeat over the next six months include:
None.
● Manufacturers' sentiments that have improved in the February survey
and the trend is expected to continue for the next six months include:
Restaurants and Hotels.
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