The Taiwanese Economy in April 2019

The trade war between the US and China, two economic giants in the world, has been escalating. The intensifying trade conflicts add further uncertainties to the global economy. The Taiwan Institute of Economic Research (TIER) issued its most recent composite indicators for manufacturing, service and construction. All of three indicators go down at the same time signaling a rather pessimistic business sentiment.
Taiwan's exports in April 2019 decreased by 3.30% compared with the same month of 2018, and it is the 6th-month consecutive decrease. Regarding imports, Taiwan's imports in April 2019 increased by 2.60% compared with imports in April 2018. On the cumulated basis, exports and imports from January till the end of April this year gave a trade surplus of US$ 11.61 billion or decreased by 27.0% on a y-o-y basis.
Taiwan's consumer price index (CPI) increased by 0.66% in April 2019 compared with the same month of previous year. The core inflation rate excluding prices of the energy and food grew by 0.59% in April 2019. In addition, the wholesale price index (WPI) moved up by 0.58% in April 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 backed by stronger US economic performance. The NTD/USD stood at 30.905 in late April 2019 indicating a 0.26% depreciation. Regarding the interest rate, it remained low and steady in April 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 April 2019 stood at 0.179% and 0.195% respectively.

Business Outlook

The portion of manufacturing firms who perceived business were better than expected in the target month was 23.5% or decreased by 22.0 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 25.1% or increased by 13.2 percentage points than 11.9% perceiving worse business of the previous month. The portion of manufacturing firms who perceived business remained constant in the target month was 51.5% or increased by 9.0 percentage points compared with 42.5% 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 32.7% in the target month or increased by 0.1 percentage points than 32.6% feeling more optimistic about the future in the previous month. The portion of firms who perceived the economic outlook would be worsening was 19.6% or increased by 4.4 percentage points compared with 15.2% 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 47.6% or decreased by 4.6 percentage points compared with 52.2% feeling neutral about the business outlook one month earlier. Overall, manufacturing firms perceived the business in the near future was also somewhat rather pessimistic than the previous month.
The manufacturing composite indicator for April 2019 adjusted for seasonal factors on moving average, saw a downward correction, and from a revision of as 95.85 points in March 2019 moved down to 95.08 points. Figure 1 shows a decrease of 0.77 points, the first drop after four months of consecutive increase.
The TIER service sector composite indicator for April 2019 adjusted for seasonal factors on moving average, saw a downward correlation, and from a revision of as 96.62 points in March 2019 moved down to 96.09 points. Figure 1 shows a decrease of 0.53 points, the first drop after a one-month increase.
In addition, the TIER Construction Sector Composite Indicator for April 2019 adjusted for seasonal factors on moving average, also saw a downward correction, and from a revision of 90.91 points in March 2019 went down to 90.66 points. Figure 1 shows a decrease of 0.25 points, the second month of consecutive decrease.

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