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2020.5.25
World major economies aim for bottom rebound
TIER's composite indicators signal tepid recovery approaching

The Taiwanese Economy in April 2020

Despite world major economies are all looking for the best timing to ease the restriction measures coping with the COVID-19 crisis, international institutes including the IHS Markit, United Nations and Economist Intelligence Unit have all further adjusted their forecasts for this year significantly downward. However, the composite indicators issued by the Taiwan Institute of Economic Research (TIER) signaled that a tepid recovery or the chance of bottom rebound could be approaching. Both the manufacturing and construction composite indicators continued to dip, but the service composite indicator increased.
Taiwan's exports in April 2020 decreased by 1.26% compared with the same month of 2019 in spite of a strong market demand for ICT parts and components. Regarding imports, Taiwan's imports in April 2020 only increased by 0.49% compared with imports in April of 2019 due to the continuously dipping crude oil prices. On the cumulative basis, Taiwan's exports and imports from January 1 till April 30 of 2020 grew by 2.43% and 2.70% compared with the same period of previous year. The trade surplus during the period stood at US$ 11.79 billion or increased by 0.37% on the year-on-year basis.
Taiwan's consumer price index (CPI) decreased by 0.97% in April 2020 compared with the same month of previous year due to the decreasing global crude oil prices. The core inflation rate excluding prices of the energy and food increased by 0.05% in April 2020. In addition, the wholesale price index (WPI) decreased by 10.75% in April 2020 on the year-on-year basis due to the fact that commodity prices dropped continuously.
As for exchange rate, the NTD similar to all other Asian currencies went somewhat stronger due to the relatively weaker USD with respect to the Fed's looser monetary policies and risk averse atmosphere. The NTD/USD stood at 29.80 in late April 2020 indicating a 1.49% appreciation. Regarding the interest rate, it remained low and steady in April 2020 due to the continued loose monetary operations by the CBC with respect to the most recent CPI reading; the lowest and highest over-night call rate in April 2020 stood at 0.074% and 0.092% respectively.

Business Outlook

The portion of manufacturing firms who perceived business were better than expected in the target month was 21.7% or decreased by 5.5 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 54.3% or increased by 19.0 percentage points than 35.3% perceiving worse business of the previous month. The portion of manufacturing firms who perceived business remained constant in the target month was 24.0% or decreased by 13.5 percentage points compared with 37.5% perceiving constant business in the previous month. Overall, manufacturing firms perceived the business in the target month was somewhat pessimistic than the previous month.
In addition, the portion of manufacturers who perceived business would be better in the next six months was 24.8% in the target month or increased by 6.7 percentage points than 18.1% feeling more optimistic about the future in the previous month. The portion of firms who perceived the economic outlook would be worsening was 34.9% or decreased also by 5.6 percentage points compared with 40.5% 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 40.3% or decreased by 1.1 percentage points compared with 41.4% feeling neutral about the business outlook one month earlier. Overall, manufacturing firms perceived the business in the near future was a little bit optimistic compared with the previous month due to the uncertain impacts of COVID-19 outbreak.
The manufacturing composite indicator for April 2020 adjusted for seasonal factors on moving average, saw a downward correction, and from a revision of as 82.55 points in March 2020 moved down to 81.75 points. Figure 1 shows a decrease of 0.80 points, the fourth-month consecutive dip.
The TIER service sector composite indicator for April 2020 adjusted for seasonal factors on moving average saw an upward correlation, and from a revision of as 81.97 points in March 2020 moved up to 82.37 points. Figure 1 shows an increase of 0.40 points, the first mount after the third-month consecutive decline.
In addition, the TIER Construction Sector Composite Indicator for the seasonal factors on moving average saw a downward correlation, and from a revision of 85.79 points in March 2020 went down to 84.36 points. Figure 1 shows a decrease of 1.43 points, the fourth-month consecutive decline.

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:
Wood and Bamboo Products Manufacturing, Printing, Industrial Chemicals, Petrochemicals Manufacturing, Petroleum and Coal Products Manufacturing, Rubber Products Manufacturing, Porcelain and Ceramic Products Manufacturing, Iron and Steel Basic Industries, Fabricated Metal Products Manufacturing, Screw, Nut Manufacturing, Metal Structure and Architectural Components Manufacturing, Machinery and Equipment Manufacturing and Repairing, Cutlery and Tools Manufacturing, Industrial Machinery, Audio and Video Electronic Products Manufacturing, Motor Parts Manufacturing, Education and Entertainment Articles Manufacturing, Restaurants and Hotels, Telecommunication Services.
 
● Manufacturers' sentiments that have been in decline in the April survey, but are expected to improve over the next six months include:
Real Estate Investment, Retail Sales.
 
● Manufacturers' sentiments that have been in decline in the April survey and are expected to remain sluggish over the next six months include:
Plastics and Rubber Raw Materials, Man-made Fibers Manufacturing, Chemical Products Manufacturing, Plastic Products Manufacturing, Electronic Parts and Components Manufacturing, Transport Equipment Manufacturing and Repairing, Motor Vehicles Manufacturing, Motorcycles Manufacturing, Motorcycles Parts Manufacturing, Precision Instruments Manufacturing, Wholesale, Transportation and Storage.
 
● 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:
Prepared Animal Feeds Manufacturing, Paper Manufacturing, Glass and Glass Products Manufacturing, Metal Dies, Bicycles 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:
Frozen Food Manufacturing, Edible Oil Manufacturing, Flour Milling and Grain Husking , Construction, Basic Civil Structure Construction.
 
● 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, Soft Drink Manufacturing , Textiles Mills, Yarn Spinning Mills, Fabric Mills , Apparel, Clothing Accessories and Other Textile Product Manufacturing, Leather, Fur and Allied Product Manufacturing, Electrical Machinery, Electrical Machinery, Supplies Manufacturing and Repairing, Electric Wires and Cables Manufacturing, Electrical Appliances and Housewares Manufacturing, Electronic Machinery, Communications Equipment and Apparatus Manufacturing.
 
● Manufacturers' sentiments that have improved in the April survey and is expected to deteriorate over the next six months include:
Bicycles Manufacturing.
 
● Manufacturers' sentiments that have improved in the April survey and is expected to remain upbeat over the next six months include:
Cement and Cement Products Manufacturing, Securities.
 
● Manufacturers' sentiments that have improved in the April survey and the trend is expected to continue for the next six months include:
Slaughtering, Non-metallic Mineral Products Manufacturing, Data Storage Media Units Manufacturing and Reproducing, Banks, Insurance.

 

 

 
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