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The Taiwanese Economy in April 2021
Despite the fact that the COVID-19confirmed cases around the world have been increasing; further uncertainties may arise, the world demand is still strong. As a result, Taiwan’s exports in goods performed strong in April 2021 thanks to the improving global demand. However, more cautious measures may be needed to maintain the growth momentum.
Taiwan’s exports in April 2021 increased by 38.65% compared with the same month of 2020, the highest rate since August 2010, thanks to a strong market demand for ICT parts and components and other merchandises in addition to much lower base effect, the severe COVID-19 impacts. Regarding imports, Taiwan’s imports in April 2021 increased by 26.38% compared with imports in April of 2020; lower base effect would further be the main cause. On the cumulative basis, Taiwan’s exports and imports from January 1st till the end of April in 2021 gave a trade surplus as at US$ 20.55 billion or increase by 70.79% on y-o-y basis.
Taiwan’s consumer price index (CPI) increased by 2.09% in April 2021 compared with the same month of previous year. The core inflation rate excluding prices of the energy and food increased by 1.35% in April 2021. In addition, the wholesale price index (WPI) increased by 9.62% in April 2021 on the year-on-year basis. Overall, the cost effect is the main cause driving up the price level.
As for exchange rate, the NTD went stronger due to the relatively weaker USD. The NTD/USD stood at 27.95 in late April 2021 indicating a 2.04% appreciation. Regarding the interest rate, it remained low and steady in April 2021 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 2021 stood at 0.079% and 0.080% respectively.
Business Outlook
The portion of manufacturing firms who perceived business were better than expected in the target month was 38.5% or decreased by 18.5 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 13.1% or increased by 4.5 percentage points than 8.6% perceiving worse business of the previous month. The portion of manufacturing firms who perceived business remained constant in the target month was 48.4% or increased by 14.1 percentage points compared with 34.3% perceiving constant business in the previous month. Overall, manufacturing firms perceived the business in the target month was rather pessimistic compared with the previous month.
In addition, the portion of manufacturers who perceived business would be better in the next six months was 39.6% in the target month or decreased by 3.1 percentage points than 42.7% feeling more optimistic about the future in the previous month. The portion of firms who perceived the economic outlook would be worsening was 7.9% or increased by 1.2 percentage points compared with 6.7% 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 52.5% or increased by 1.9 percentage points compared with 50.6% feeling neutral about the business outlook one month earlier. Overall, manufacturing firms perceived the business in the near future was rather neutral compared with the previous month.
The manufacturing composite indicator for April 2021 adjusted for seasonal factors on moving average, saw a mild upward correction, and from a revision of as 105.68 points in March 2021 moved up somewhat to 106.37 points in April 2021. Figure 1 shows a slight increase of 0.69 points. The current reading is still considered as somewhat promising in business outlook.
The TIER service sector composite indicator for April 2021 adjusted for seasonal factors on moving average saw a downward correlation, and from a revision of as 101.47 points in March 2021 moved down to 100.41 points. Figure 1 shows a decrease of 1.06 points, the first dip after four-month of consecutive increase. In addition, the TIER Construction Sector Composite Indicator for April 2021 adjusted for the seasonal factors on moving average also saw a downward correlation, and from a revision of 106.60 points in March 2021 went down to 106.01 points in April 2021. Figure 1 shows a mild decrease of 0.59 points.
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:
Transport Equipment Manufacturing and Repairing, Motor Vehicles Manufacturing, Motorcycles Parts Manufacturing.
● Manufacturers’ sentiments that have been in decline in the April survey, but are expected to improve over the next six months include:
Soft Drink Manufacturing, Electrical Machinery, Supplies Manufacturing and Repairing, Data Storage Media Units Manufacturing and Reproducing, Bicycles Manufacturing.
● Manufacturers’ sentiments that have been in decline in the April survey and are expected to remain sluggish over the next six months include:
Leather, Fur and Allied Product Manufacturing, Chemical Products Manufacturing, Rubber Products Manufacturing, Plastic Products Manufacturing, Motorcycles Manufacturing.
● 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:
Printing.
● 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:
Prepared Animal Feeds Manufacturing, Industrial Chemicals, Petrochemicals Manufacturing, Plastics and Rubber Raw Materials, Petroleum and Coal Products Manufacturing, Non-metallic Mineral Products Manufacturing, Glass and Glass Products Manufacturing, Cement and Cement Products Manufacturing, Iron and Steel Basic Industries, Metal Structure and Architectural Components Manufacturing, Electrical Machinery, Electronic Machinery, Audio and Video Electronic Products Manufacturing, Precision Instruments Manufacturing, Insurance.
● 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, Slaughtering, Frozen Food Manufacturing, Edible Oil Manufacturing, Flour Milling and Grain Husking, Porcelain and Ceramic Products Manufacturing, Fabricated Metal Products Manufacturing, Metal Dies, Screw, Nut Manufacturing, Communications Equipment and Apparatus Manufacturing, Motor Parts Manufacturing, Construction, Basic Civil Structure Construction, Real Estate Investment, Retail Sales, Wholesale, Restaurants and Hotels, Banks, Telecommunication Services.
● Manufacturers’ sentiments that have improved in the April survey and is expected to deteriorate over the next six months include:
None.
● Manufacturers’ sentiments that have improved in the April survey and is expected to remain upbeat over the next six months include:
Textiles Mills, Fabric Mills , Apparel, Clothing Accessories and Other Textile Product Manufacturing, Paper Manufacturing, Machinery and Equipment Manufacturing and Repairing, Cutlery and Tools Manufacturing, Industrial Machinery, Electric Wires and Cables Manufacturing, Electrical Appliances and Housewares Manufacturing, Electronic Parts and Components Manufacturing, Bicycles Parts Manufacturing, Education and Entertainment Articles Manufacturing, Transportation and Storage.
● Manufacturers’ sentiments that have improved in the April survey and the trend is expected to continue for the next six months include:
Yarn Spinning Mills, Wood and Bamboo Products Manufacturing, Man-made Fibers Manufacturing, Securities.
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