|
The Taiwanese Economy in March 2022
The Russia-Ukraine war has showed no sign of leading to truce so far. The geopolitical conflict has caused serious impacts on the world economy, as both Russia and Ukraine are both important countries of producing and exporting raw commodities. In addition, China's “zero COVID” policy aiming to cope with its recent outbreak has added further uncertainty to the global economic recovery. The manufacturing and construction composite indicators issued by the Taiwan Institute of Economic Research (TIER) both declined in March 2022; however, the service composite indicator went up. Despite the worsening external conditions, Taiwan's export engine has remained strong and solid. TIER conducted its GDP forecast for the second time on 25th April predicting Taiwan's economy this year will grow by 4.10%, same as its previous forecast conducted earlier this year.
Taiwan's economic performance in external markets has so far still remained quite good. Taiwan's exports in March 2022 increased significantly by 21.27% compared with the same month of 2021, the consecutive thirteen-month in double digit growth, as a result of a strong market demand for ICT parts and components and other merchandises. Regarding imports, Taiwan's imports in March 2022 increased by 20.28% compared with imports in February of 2021, also the consecutive thirteen-month in double digit growth. Taiwan's exports and imports from January till the end of March 2022 gave a trade surplus as at US$ 15.50 billion or increase by 9.96% year-on-year due to base effect. As the export order have continued such momentum, it is also expected that Taiwan's exports will maintain strong in at least the first half of 2022.
Taiwan's consumer price index (CPI) increased by 3.27% in March 2022 compared with the same month of previous year, which would be 0.27 percentage points higher than the inflation rate of previous month. The core inflation rate excluding prices of the energy and food increased by 2.47% in March 2022, which would be 0.83 percentage points higher than the core inflation rate in February 2022. In addition, the wholesale price index (WPI) increased by 13.89% in March 2022 on the year-on-year basis, the consecutive twelve-month in double digit growth. The pressure of surging input costs is still mounting meaning the producers need to transfer the cost to consumers eventually, if the imported inflation problem is not yet resolved soon. With respect to the ongoing Russia-Ukraine war as well as China's “zero COVID” policy and its influence on regional supply chains, the inflationary pressure is likely to go on for a while.
As for exchange rate, the NTD went a bit weaker due to the relatively stronger USD in March 2022. As the US Federal Reserve's upcoming policy is expected to be more hawkish in order to cope with the inflation rate standing at 8.5% in March 2022. The NTD/USD stood at 28.622 in late March 2022, indicating a 2.14% depreciation. The Taiwan central bank (CBC) raised its key interest rates by 0.25 percentage points on 17th March 2022. Regarding the over-night call rate; the lowest and highest rate in March 2022 stood at 0.078% and 0.187% respectively.
Business Survey Outcomes
The portion of manufacturing firms who perceived business were better than expected in the target month was 41.1% or increased by 26.2 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 15.3% or decreased by 11.8 percentage points than 27.1% of respondents perceiving worse business of the previous month. The portion of manufacturing firms who perceived business remained constant in the target month was 43.6% or decreased by 14.4 percentage points than the ratio of previous month's respondents perceiving constant business. Overall, manufacturing firms perceived the business in the target month was rather optimistic about the business conditions compared with the previous month.
In addition, the portion of manufacturers who perceived business would be better in the next six months was 28.6% in the target month or decreased by 13.3 percentage points than 41.9% of respondents feeling more optimistic about the near future in the previous month. The portion of firms who perceived the economic outlook would be worsening was 15.8% or increased by 7.9 percentage points compared with 7.9% of respondents feeling rather pessimistic about the near future in the previous month. The portion of manufacturing firms who perceived business remained constant in the next six months stood at 55.6% or increased by 5.4 percentage points compared with 50.2% of respondents feeling neutral about the business outlook one month earlier. Overall, manufacturing firms perceived the business in the near future was as a result more pessimistic compared with the previous month.
As a result, the manufacturing composite indicator for March 2022 adjusted for seasonal factors on moving average, saw a downward correction, and from a revision of as 101.37 points in February moved down to 99.21 points in March 2022. Figure 1 shows a decrease of 2.16 points, a three-month of consecutive decrease.
Moreover, the TIER service sector composite indicator for March 2022 adjusted for seasonal factors on moving average also saw an upward correlation, and from a revision of as 94.17 points in February moved up to 95.05 points in March 2022. Figure 1 shows an increase of 0.88 points, the first month of increase after a two-month of consecutive decrease.
Last but not the least, the TIER construction sector composite Indicator for March 2022 adjusted for the seasonal factors on moving average saw a downward correlation, and from a revision of 106.01 points in February went down to 105.34 points in March 2022. Figure 1 shows a decrease of 0.67 points, a two-month of consecutive decrease.
Analyses and Outlook of Industries
Following are manufacturers' sentiments that are industry-specific in the monthly TIER surveys:
● Manufacturers' sentiments that have been in decline in the March survey and are expected to deteriorate over the next six months include:
Cutlery and Tools Manufacturing, Motorcycles Manufacturing.
● Manufacturers' sentiments that have been in decline in the March survey, but are expected to improve over the next six months include:
Construction.
● Manufacturers' sentiments that have been in decline in the March survey and are expected to remain sluggish over the next six months include:
None.
● Manufacturers surveyed who felt the March outlook was the same as the previous month, but the outlook is expected to exacerbate over the next six months include:
Yarn Spinning Mills, Leather, Fur and Allied Product Manufacturing, Industrial Chemicals, Petrochemicals Manufacturing, Plastics and Rubber Raw Materials, Man-made Fibers Manufacturing, Rubber Products Manufacturing.
● Manufacturers surveyed who felt the March outlook was the same as the previous month, but the outlook is expected to improve over the next six months include:
None.
● Manufacturers surveyed who felt the March outlook was the same as the previous month and the trend is expected to continue for the next six months include:
Manufacturing, Soft Drink Manufacturing , Textiles Mills, Fabric Mills , Apparel, Clothing Accessories and Other Textile Product Manufacturing, Wood and Bamboo Products Manufacturing, Non-metallic Mineral Products Manufacturing, Glass and Glass Products Manufacturing, Cement and Cement Products Manufacturing, Communications Equipment and Apparatus Manufacturing, Transport Equipment Manufacturing and Repairing, Motor Vehicles Manufacturing, Motorcycles Parts Manufacturing, Education and Entertainment Articles Manufacturing, Basic Civil Structure Construction, Restaurants and Hotels, Banks, Insurance.
● Manufacturers' sentiments that have improved in the March survey and is expected to deteriorate over the next six months include:
Plastic Products Manufacturing, Industrial Machinery, Securities.
● Manufacturers' sentiments that have improved in the March survey and is expected to remain upbeat over the next six months include:
Slaughtering, Frozen Food Manufacturing, Petroleum and Coal Products Manufacturing, Iron and Steel Basic Industries, Metal Structure and Architectural Components Manufacturing, Electrical Machinery, Electrical Machinery, Supplies Manufacturing and Repairing, Electric Wires and Cables Manufacturing, Electronic Machinery, Electronic Parts and Components Manufacturing, Motor Parts Manufacturing, Bicycles Manufacturing, Bicycles Parts Manufacturing, Telecommunication Services.
● Manufacturers' sentiments that have improved in the March survey and the trend is expected to continue for the next six months include:
Food, Edible Oil Manufacturing, Flour Milling and Grain Husking , Prepared Animal Feeds Manufacturing, Paper Manufacturing, Printing, Chemical Products Manufacturing, Porcelain and Ceramic Products Manufacturing, Fabricated Metal Products Manufacturing, Metal Dies, Screw, Nut Manufacturing, Machinery and Equipment Manufacturing and Repairing, Electrical Appliances and Housewares Manufacturing, Audio and Video Electronic Products Manufacturing, Data Storage Media Units Manufacturing and Reproducing, Precision Instruments Manufacturing, Real Estate Investment, Retail Sales, Wholesale, Transportation and Storage.
TIER Forecast (issued on 25th April, 2022.)
(NT$100 million, Chained (2016) Dollars)
|