August 2022  
Advanced economies facing inflationary pressures, emerging markets facing recession of capital jointly hamper the global economic outlook
TIER’s latest composite indicators suggest that service and construction sectors have better prospects than manufacturing sector
Advanced economies are still coping with inflationary pressures, and emerging markets are dealing with a serious recession of capital, which have been jointly hampering the global economic outlook. In view of the above situation, major international forecasting agencies have coincidentally revised down the economic growth rates of major economies. The Department of Statistics of the Ministry of Economic Affairs in Taiwan announced on August 22nd that the value of export orders in July was US$54.26 billion, a year-on-year decrease of 1.9%. The Department pointed out that although it is currently entering a “peak season” of new technology products, it is however facing a series of “black swan” such as resurgence pandemic, high-inflation shocks, power cuts in China, drought in Europe, and ongoing Russian-Ukrainian war. The Taiwan Institute of Economic Research (TIER) issued monthly composite indicators on August 25th. Its indicators suggest that Taiwan’s service and construction sectors have better prospects than the manufacturing sector for the time being. The manufacturing composite indicator for July 2022 adjusted for seasonal factors on moving average decreased by 1.09 points, a seven-month of consecutive decrease. However, the service industry has benefited from the slowdown of the local epidemic and coincides with the arrival of the peak summer season. As for the construction industry, it is about to enter the fourth phase of the forward-looking plan, so the outlook for the construction industry in the next six months will be regarded as improving. ...Read more
U.S., Taiwan to Begin Formal Talks for Trade, Investment Pact This Fall
The U.S. announced on 17th August that it and Taiwan will start negotiations for a bilateral trade and investment initiative this fall to deepen ties on a range of issues including technology and agriculture. The new pact will also address ways to respond to “distortive practices of state-owned enterprises and nonmarket policies and practices,” the U.S. Trade Representative’s office said, in a clear reference to China’s policies without naming the country. The pact will “deepen our trade and investment relationship, advance mutual trade priorities based on shared values, and promote innovation and inclusive economic growth for our workers and businesses,” said Deputy U.S. Trade Representative Sarah Bianchi. The list of the areas to be covered by the new agreement, dubbed the U.S.-Taiwan Initiative on 21st-Century Trade, includes trade facilitation, regulatory practices, anticorruption standards, and enhancing trade between small and medium enterprises (Source: the Wall Street Journal).

Taiwan reports highest-ever July food and beverage sales (Source: Focus Taiwan).
Industrial production rises 1.12% (Source: Taipei Times).
Taiwan Economic Research Monthly
Reducing tariffs to stabilize prices requires careful research
U.S. inflation has been rising fast and significantly, and many people suggest and advocate lowering the punitive tariffs imposed on some Chinese imported goods during the Trump administration so as to reduce import costs and related prices, an idea to cope with inflation Janet Yellen, the former chairman of the US Federal Reserve and the current US Treasury secretary, also concurs with this idea; however, Katherine Chi Tai, the US trade representative, believes that the tariff has its strategic purpose, and its adjustment should be based on medium and long-term demand, and does not seem to agree with short-term prices. There are many long-term purposes of the tariff policy. To see whether it is worth adjusting for the short-term impact on the price increase rate, it is necessary to carefully consider its various purposes and actual effects, as well as other effects that may be caused by the adjustment.
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