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2017.3.24
The world economic outlook is promising
Taiwan's economy will benefit from heating external demand

The Taiwanese Economy in February 2017

The world economic outlook is promising: a) the US economy is recovering and on the right track, b) the job market in European is improving and its long-lasting deflationary fear subsides, and c) the Chinese PMI is at the expansion mode. As a result, Taiwan can certainly benefit from the heating external demand.
Taiwan’s exports in February 2017 increased by 27.66% compared with the same month of 2016. Regarding imports, Taiwan’s imports in February 2017 increased by 42.1% compared with imports in February 2016. From January 1st till the end of February, Taiwan’s exports and imports gave a trade surplus of US$ 6.86 billion or a decrease by 11.02% on a y-o-y basis.
Taiwan’s consumer price index (CPI) went down by 0.04% in February 2017 compared with the same month of previous year. The current inflation rate has dropped tremendously compared with previous months. The core inflation rate stood at a relatively more tepid ratio as 0.17% in February, 2017. In addition, the wholesale price index (WPI) increased by 2.19% in February 2017 on the year-on-year basis.
As for exchange rate, the NTD went somewhat stronger due to the relatively weaker USD in February 2017, as the US president Donald Trump recently complained about the strong USD causing the US economy going slow. The USD/NTD stood at 30.650 in late February 2017 indicating a 2.26% appreciation. Regarding the interest rate, it remained low and steady in February 2017 due to the continued loose monetary operations by the CBC with respect to the most recent CPI reading.

Business Outlook

The portion of manufacturing firms who perceived business were better than expected in the target month was 20.5% or increased by 1.1% 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 27.5% or decreased by 2.7 percentage points than 30.2% perceiving worse business of the previous month. The portion of manufacturing firms who perceived business remained constant in the target month was 52.0% or increased by 1.6 percentage points compared with 50.4% perceiving constant business in the previous month. Overall, manufacturing firms perceived the business in the target month was somewhat neutral.
In addition, the portion of manufacturers who perceived business would be better in the next six months was 40.3% in the target month or increased by 4.2 percentage points than 36.1% feeling more optimistic about the future in the previous month. The portion of firms who perceived the economic outlook would be worsening was 7.5% or decreased by 6.9 percentage points compared with 14.4% 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 52.2% or increased by 2.7 percentage points compared with 49.5% feeling neutral about the business outlook one month earlier. Overall, manufacturing firms perceived the business in the near future was neutral to somewhat optimistic.
The manufacturing composite indicator for February, 2017 adjusted for seasonal factors on moving average, saw a downward correction, and from a revision of as 99.93 points in January moved down to 98.05 points. Figure 1 shows a decrease of 1.88 points, a 2-month of consecutive decrease.
The TIER service sector composite indicator for February 2017 adjusted for seasonal factors on moving average also saw a downward correction and from a revision of 90.59 points in January went down to 89.19 points. Figure 1 shows a decrease of 1.40 points, the first drop after 2-month of consecutive increase.
In addition, the TIER Construction Sector Composite Indicator for February 2017 adjusted for seasonal factors on moving average saw an upward correction, and from a revision of 87.05 points in January went up to 90.71 points. Figure 1 shows an increase of 3.66 points, the second month of consecutive increase as well as a new high since October 2014.

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 Feburary survey and are expected to deteriorate over the next six months include:
Leather, Fur and Allied Product Manufacturing, Printing, Petroleum and Coal Products Manufacturing, Porcelain and Ceramic Products Manufacturing.

●Manufacturers' sentiments that have been in decline in the Feburary survey, but are expected to improve over the next six months include:
Non-metallic Mineral Products Manufacturing, Cement and Cement Products Manufacturing, Insurance, Transportation and storage.

●Manufacturers' sentiments that have been in decline in the Feburary survey and are expected to remain sluggish over the next six months include:
Food, Frozen Food Manufacturing, Apparel, Clothing Accessories and Other Textile Product Manufacturing , Wood and Bamboo Products Manufacturing, Chemical Products Manufacturing, Screw, Nut Manufacturing, Electrical Appliances and Housewares Manufacturing, Audio and Video Electronic Products Manufacturing, Motor Parts Manufacturing, Motorcycles Parts Manufacturing, Bicycles Parts Manufacturing, Education and Entertainment Articles Manufacturing, Retail sales, Wholesale, Telecommunication services.

●Manufacturers surveyed who felt the Feburary outlook was the same as the previous month, but the outlook is expected to exacerbate over the next six months include:
Man-made Fibers Manufacturing, Rubber Products Manufacturing, Plastic Products Manufacturing.

●Manufacturers surveyed who felt the Feburary outlook was the same as the previous month, but the outlook is expected to improve over the next six months include:
Fabric Mills , Electrical Machinery, Electric Wires and Cables Manufacturing, Electronic Machinery, Communications Equipment and Apparatus Manufacturing, Electronic Parts and Components Manufacturing, Banks.

●Manufacturers surveyed who felt the Feburary outlook was the same as the previous month and the trend is expected to continue for the next six months include:
Manufacturing, Slaughtering, Edible Oil Manufacturing, Flour Milling and Grain Husking , Prepared Animal Feeds Manufacturing, Textiles Mills, Yarn Spinning Mills, Industrial Chemicals, Petrochemicals Manufacturing, Plastics and rubber raw materials, Iron and Steel Basic Industries, Fabricated Metal Products Manufacturing, Metal dies, Metal Structure and Architectural Components Manufacturing, Data Storage Media Units Manufacturing and Reproducing, Transport Equipment Manufacturing and Repairing, Motor Vehicles Manufacturing, Motorcycles Manufacturing, Bicycles Manufacturing, Construction, Basic civil structure construction, Real estate investment, Restaurants and hotels.

●Manufacturers' sentiments that have improved in the Feburary survey and is expected to deteriorate over the next six months include:
Glass and Glass Products Manufacturing.

●Manufacturers' sentiments that have improved in the Feburary 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, Electrical Machinery, Supplies Manufacturing and Repairing, Precision Instruments Manufacturing, Securities.

●Manufacturers' sentiments that have improved in the Feburary survey and the trend is expected to continue for the next six months include:
Soft Drink Manufacturing.

 

 

 
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