The Taiwanese Economy in February 2018
The global economic outlook seems promising with strong support
by outstanding performances of the US, Europe, and emerging markets.
However, the possible trade war between the US and China could be
the biggest uncertainty hindering the recovery of the world economy.
Due to seasonal and base effects, all three composite indicators
issued by the Taiwan Institute of Economic Research (TIER) dipped
at the same time.
Taiwan's exports of January and February 2018 increased by 7.26%
compared with the period of 2017. Regarding imports, Taiwan's imports
of January and February 2018 increased by 11.72% compared with imports
of January and February 2017. Taiwan's exports and imports of January
and February 2018 gave a trade surplus of US$ 5.6 billion or a decrease
by 18.39% on a year-on-year basis.
Because of the lunar new year with base period distortion, Taiwan's
consumer price index (CPI) went up by 2.19% in February 2018 compared
with the same month of previous year. The core inflation rate stood
at 2.39% in February 2018. In addition, the wholesale price index
(WPI) moved down by 0.27% in February 2018 on the year-on-year basis.
In a nutshell, the current inflation is caused mainly by the seasonal
reason.
As for exchange rate, the NTD went strong first and turned weaker
later, despite the Fed has decided to conduct tightening measures
by schedule. Nonetheless, the NTD/USD stood at 29.23 in late February
2018 indicating a 0.27% depreciation. Regarding the interest rate,
it remained low and steady in February 2018 due to the continued
loose monetary operations by the CBC with respect to the most recent
economic performance and exchange rate of NTD; the lowest and highest
over-night call rate in February 2018 stood at 0.176% and 0.187%
respectively.
Business Outlook
The portion of manufacturing firms who perceived business were
better than expected in the target month was 16.1% or decreased
by 14.3 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 42.1% or increased
by 25.9 percentage points than 16.2% perceiving worse business of
the previous month. The portion of manufacturing firms who perceived
business remained constant in the target month was 41.8% or decreased
by 11.6 percentage points compared with 53.4% 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 49.7% in the target month
or increased by 15.0 percentage points than 34.7% feeling more optimistic
about the future in the previous month. The portion of firms who
perceived the economic outlook would be worsening was 8.1% or decreased
by 3.2 percentage points compared with 11.3% 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 42.2% or decreased by 11.9 percentage points compared with
54.1% feeling neutral about the business outlook one month earlier.
Overall, manufacturing firms perceived the business in the near
future was also somewhat more optimistic.
The manufacturing composite indicator for February, 2018 adjusted
for seasonal factors on moving average, saw a downward correction,
and from a revision of as 100.19 points in January moved down to
98.33 points in February 2018. Figure 1 shows a decrease of 1.86
points.
The TIER service sector composite indicator for February 2018 adjusted
for seasonal factors on moving average, saw a downward correlation,
and from a revision of as 93.74 points in January moved down to
93.22 points in February 2018. Figure 1 shows a decrease of 0.52
points.
In addition, the TIER Construction Sector Composite Indicator for
February 2018 adjusted for seasonal factors on moving average also
saw a downward correction, and from a revision of 105.17 points
in January went down to 101.99 points in February 2018. Figure 1
shows a decrease of 3.18 points.
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:
Plastic Products Manufacturing, Restaurants and hotels.
● Manufacturers' sentiments that have been in decline in the February
survey, but are expected to improve over the next six months include:
Plastics and rubber raw materials, Non-metallic Mineral Products
Manufacturing, Cement and Cement Products Manufacturing, Electrical
Machinery, Electrical Machinery, Supplies Manufacturing and Repairing,
Electric Wires and Cables Manufacturing, Electrical Appliances and
Housewares Manufacturing, Communications Equipment and Apparatus
Manufacturing, Transport Equipment Manufacturing and Repairing,
Motor Parts Manufacturing, Education and Entertainment Articles
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:
Chemical Products Manufacturing, Petroleum and Coal Products Manufacturing,
Rubber Products Manufacturing, Porcelain and Ceramic Products Manufacturing,
Glass and Glass Products Manufacturing, Fabricated Metal Products
Manufacturing, Metal dies, Metal Structure and Architectural Components
Manufacturing, Audio and Video Electronic Products Manufacturing,
Data Storage Media Units Manufacturing and Reproducing, Motorcycles
Manufacturing, Motorcycles Parts Manufacturing, Bicycles Manufacturing,
Bicycles Parts Manufacturing, Construction, Basic civil structure
construction, Real estate investment, Wholesale, Securities.
● 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:
None.
● 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:
Machinery and Equipment Manufacturing and Repairing, Cutlery and
tools Manufacturing, Industrial Machinery, Electronic Machinery,
Electronic Parts and Components 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, Food, Slaughtering, Edible Oil Manufacturing, Flour
Milling and Grain Husking , Prepared Animal Feeds Manufacturing,
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,
Industrial Chemicals, Man-made Fibers Manufacturing, Iron and Steel
Basic Industries, Screw, Nut Manufacturing, Precision Instruments
Manufacturing, Retail sales, Telecommunication services, 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:
Paper Manufacturing, Printing.
● Manufacturers' sentiments that have improved in the February survey
and the trend is expected to continue for the next six months include:
Frozen Food Manufacturing, Soft Drink Manufacturing , Petrochemicals
Manufacturing, Motor Vehicles Manufacturing.

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