December 2023  
Persistent global economic uncertainties amidst sectoral variances
TIER’s composite indicators illuminate Taiwan’s economic fortitude
Observing the recent international economic situation, as inflationary pressures ease, the US Federal Reserve (Fed) and the European Central Bank (ECB) continue to maintain unchanged interest rates. While Japan's manufacturing sector continues to experience a prolonged downturn, its service industry however maintains an expansionary trend. In November, China saw an increase in the year-on-year growth rates of industrial and consumer goods sales compared to the previous month, indicating a mild recovery in China’s industrial and commercial activities, though real estate-related indicators in China continue to deteriorate. In Taiwan’s manufacturing sector, despite the global manufacturing industry’s recovery momentum being insufficient, the demand for information technology and audiovisual products remains robust, benefiting from a relatively low comparison base period. This has led to a positive growth in Taiwan’s November export and external order year-on-year rates. However, uncertainties persist in the economic outlooks of the two major economies, the US and China, and tensions are escalating in the Middle East. Consequently, although the perception of the current month’s economic conditions in Taiwan’s manufacturing sector has improved slightly compared to the previous month’s survey, the outlook for the next six months remains conservative. Taiwan’s service industry, buoyed by the impressive performance of the Taiwan stock market in November, along with rising shipping prices and sustained strong demand for air passenger transportation, has seen continued growth in the number of inbound tourists, driving up demand for food and accommodation. This positive trend has led securities, transportation and warehousing, and the hospitality industry to have optimistic views on the economic performance for the current month. ...Read more
Taiwan, US stage 4th Economic Prosperity Partnership Dialogue
The fourth Taiwan-U.S. Economic Prosperity Partnership Dialogue wrapped up Dec. 8, highlighting the commitment of the like-minded partners to further deepen trade and investment ties. The event, in both physical and virtual form, was led by Minister of Economic Affairs Wang Mei-hua and U.S. Under Secretary for Economic Growth, Energy and the Environment Jose W. Fernandez, from Taipei and Washington, respectively. Other high-profile participants included Deputy Foreign Minister Roy Chun Lee, Deputy Economic Minister Chen Chern-chyi and representatives from the Ministries of Economic Affairs and Finance. The dialogue focused on cooperation spanning economic coercion, investment, supply chain resilience and secure and sustainable energy transition, the Ministry of Foreign Affairs said. The two sides also exchanged views on strengthening information sharing and expanding existing collaboration, the ministry added. According to the MOFA, in addition to reinforcing supply chain resilience for critical minerals, Taiwan and the U.S. will jointly enlarge their semiconductor personnel resources to meet the demands of artificial intelligence and the smart automation of industries. They have agreed on further exchanges between technological experts on energy transition and have drafted two-year plans to achieve net-zero carbon emission goals, the MOFA said, adding that both sides are also positive about the progress made toward signing a double-taxation avoidance agreement. The like-minded partners believe that the dialogue has consistently yielded positive results following its inaugural 2020 edition, the MOFA said, adding that the government will continue strengthening collaboration with the U.S. to further boost the Taiwan-U.S. economic partnership (Source: Taiwan Today).

COST OF LIVING/Over 88% of employers to give year-end bonuses: Survey (Focus Taiwan).
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Taiwan Economic Research Monthly
Possible Misuse of Real Effective Exchange Rate
Economic issues are often quite complex. Even when dealing with individual terms, concepts, or products, there are often numerous finer details, and their relationships and values can vary among different individuals and countries. Therefore, economic studies often require the use of statistical indicators to compile multiple related figures into an index or a numerical value, allowing for an understanding of intricate phenomena. Indices such as the Consumer Price Index, Gross National Income, and the Gini coefficient for income distribution, or even measures like the money supply, are essentially aggregates, averages, or selected representative indicators derived from larger sets of statistical data. While these indicators generally possess decent representativeness and utility, the design and calculation methods of the indicators, as well as the sometimes incomplete or inaccurate representation of their names and original purposes through the data used, can introduce limitations. Additionally, much information may be weakened or lost during the process of aggregation and averaging. Therefore, caution must be exercised when applying various economic indicators. This caution is especially crucial when economic indicators are further utilized for extended applications, as discrepancies between their intended meaning and their actual application may become even more pronounced. This article aims to illustrate the complexity of this issue through the example of the Real Effective Exchange Rate index (REER).
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