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The Taiwanese Economy in December 2022
With respect to the impact of COVID mutant viruses, ongoing Russia-Ukraine war, high inflation pressure and climate change, the performance of the global economy was not good at all in 2022. Most countries have implemented monetary policy tightening measures in order to cope with inflation. Negative impacts such as rising commodity prices, policy tightening and financial pressure have dimmed the global economic outlook, and the slowdown will continue in 2023. The economic performance of the United States and Europe may be likely to stagnate. Although the Chinese economy is expected to rebound due to the relaxation of lockdown measures; however, the magnitude of the rebound is still uncertain. Therefore, major international forecasting agencies believe that the growth rates of global economy and trade in 2023 will slow down compared with the previous year. On the domestic front, although the weakening of global economic demand has seriously affected Taiwan’s foreign trade performance, and manufacturers’ capital investment has also become more conservative due to the weaker external demands and rising lending interest rates, the growth of private investment has slowed down significantly; nevertheless, the government’s public construction budget scale is at a new high, coupled with the still strong private consumption, and benefiting from the continuous relaxation of domestic pandemic prevention control measures as well as the opening of borders, Taiwanese people’s overseas consumption is expected to increase significantly. It seems that the private sector and the government will work together to support Taiwan’s economic performance in 2023. The Taiwan Institute of Economic Research (TIER) issued its latest forecast for Taiwan’s GDP growth in 2023, it is predicted to grow by 2.58%.
Taiwan’s economic performance in external markets has so far still remained rather weak. Taiwan’s exports in December 2022 decreased significantly by 12.13% compared with the same month of 2021, the consecutive two-month in double digit decrease, as a result of a weakening global market demands. Regarding imports, Taiwan’s imports in December 2022 decreased by 11.37% compared with imports in December of 2021. Taiwan’s exports and imports of the entire year of 2022 gave a trade surplus as at US$ 52.11 billion or decrease by 19.10% year-on-year.
Taiwan’s consumer price index (CPI) increased by 2.71% in December 2022 compared with the same month of previous year, which would be 0.36 percentage points higher than the inflation rate of previous month. The core inflation rate excluding prices of the energy and food increased by 2.71% in December 2022, which would be 0.15 percentage points lower than the core inflation rate in November 2022. In addition, the wholesale price index (WPI) increased by 7.14% in December 2022 on the year-on-year basis.
As for exchange rate, the NTD went stronger due to the relative trend of USD exchange rate in December 2022. The NTD/USD stood at 30.708 in late December 2022, indicating a 0.63% appreciation. Regarding the over-night call rate; the lowest and highest rate in December 2022 stood at 0.431% and 0.556% respectively.
Business Survey Outcomes
The portion of manufacturing firms who perceived business were better than expected in the target month was 9.6% or decreased by 2.6 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 49.6% or increased by 8.3 percentage points than 41.3% of respondents perceiving worse business of the previous month. The portion of manufacturing firms who perceived business remained constant in the target month was 40.8% or decreased by 5.7 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 pessimistic 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 23.6% in the target month or increased by 0.7 percentage points than 22.9% 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 33.5% or decreased by 0.4 percentage points compared with 33.9% 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 42.9% or decreased by 0.3 percentage points compared with 43.2% 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 neutral compared with the previous month.
As a result, the manufacturing composite indicator for December 2022 adjusted for seasonal factors on moving average, saw an upward correction, and from a revision of as 85.16 points in November moved up to 85.97 points in December 2022. Figure 1 shows an increase of 0.81 points.
Moreover, the TIER service sector composite indicator for December 2022 adjusted for seasonal factors on moving average saw a downward correlation, and from a revision of as 90.77 points in November moved down to 89.62 points in December 2022. Figure 1 shows a decrease of 1.15 points.
In addition, the TIER construction sector composite Indicator for December 2022 adjusted for the seasonal factors on moving average saw an upward correlation, and from a revision of 87.32 points in November went up to 92.87 points in December 2022. Figure 1 shows an increase of 5.55 points.
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 December survey and are expected to deteriorate over the next six months include:
Machinery and Equipment Manufacturing and Repairing, Cutlery and Tools Manufacturing, Data Storage Media Units Manufacturing and Reproducing, Electronic Parts and Components Manufacturing, Bicycles Parts Manufacturing, Real Estate Investment, Transportation and Storage.
● Manufacturers’ sentiments that have been in decline in the December survey, but are expected to improve over the next six months include:
None.
● Manufacturers’ sentiments that have been in decline in the December survey and are expected to remain sluggish over the next six months include:
Manufacturing, Yarn Spinning Mills, Apparel, Clothing Accessories and Other Textile Product Manufacturing, Paper Manufacturing, Chemical Products Manufacturing, Rubber Products Manufacturing, Fabricated Metal Products Manufacturing, Metal Dies, Screw, Nut Manufacturing, Electric Wires and Cables Manufacturing, Audio and Video Electronic Products Manufacturing, Motorcycles Manufacturing, Construction, Securities.
● Manufacturers surveyed who felt the December outlook was the same as the previous month, but the outlook is expected to exacerbate over the next six months include:
Wood and Bamboo Products Manufacturing, Glass and Glass Products Manufacturing, Industrial Machinery, Transport Equipment Manufacturing and Repairing, Motor Vehicles Manufacturing, Bicycles Manufacturing.
● Manufacturers surveyed who felt the December outlook was the same as the previous month, but the outlook is expected to improve over the next six months include:
Food, Soft Drink Manufacturing, Printing, Electrical Machinery, Supplies Manufacturing and Repairing, Precision Instruments Manufacturing, Banks, Telecommunication Services.
● Manufacturers surveyed who felt the December outlook was the same as the previous month and the trend is expected to continue for the next six months include:
Slaughtering, Prepared Animal Feeds Manufacturing, Textiles Mills, Fabric Mills , Leather, Fur and Allied Product Manufacturing, Industrial Chemicals, Petrochemicals Manufacturing, Plastics and Rubber Raw Materials, Man-made Fibers Manufacturing, Petroleum and Coal Products Manufacturing, Plastic Products Manufacturing, Porcelain and Ceramic Products Manufacturing, Iron and Steel Basic Industries, Metal Structure and Architectural Components Manufacturing, Electrical Machinery, Electrical Appliances and Housewares Manufacturing, Electronic Machinery, Motorcycles Parts Manufacturing, Education and Entertainment Articles Manufacturing, Wholesale.
● Manufacturers’ sentiments that have improved in the December survey and is expected to deteriorate over the next six months include:
None.
● Manufacturers’ sentiments that have improved in the December survey and is expected to remain upbeat over the next six months include:
Frozen Food Manufacturing, Edible Oil Manufacturing, Flour Milling and Grain Husking, Motor Parts Manufacturing, Basic Civil Structure Construction, Retail Sales, Restaurants and Hotels, Insurance.
● Manufacturers’ sentiments that have improved in the December survey and the trend is expected to continue for the next six months include:
Non-metallic Mineral Products Manufacturing, Cement and Cement Products Manufacturing, Communications Equipment and Apparatus Manufacturing.
TIER Forecast (issued on 31st January, 2023.)
(NT$100 million, Chained (2016) Dollars)
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