The Taiwanese Economy in December 2020
COVID-19 cases have been increasing recently in the US, Europe,
Japan and certain emerging economies. So far, the leading indicators
of major economies have remained solid; the question is whether
and how long the promising indices can sustain. Nevertheless, the
composite indicator of manufacturing issued by the Taiwan Institute
of Economic Research (TIER) signal optimism in December 2020 due
to growing in export orders. As a result, TIER predicted that the
economic growth rate for Taiwan in 2021 would stand at 4.30%.
Taiwan's exports in December 2020 increased by 11.96% compared with
the same month of 2019 thanks to a strong market demand for ICT
parts and components. Regarding imports, Taiwan's imports in December
2020 increased by 0.88% compared with imports in December of 2019.
On the cumulative basis, Taiwan's exports and imports from January
1st till December 31st of 2020 actually grew by 4.90% and 0.29%
compared with the same period of previous year. The trade surplus
during the period stood at US$ 58.79 billion or increased by 35.14%
on the year-on-year basis.
Taiwan's consumer price index (CPI) increased by 0.06% in December
2020 compared with the same month of previous year. The core inflation
rate excluding prices of the energy and food increased by 0.69%
in December 2020. In addition, the wholesale price index (WPI) decreased
by 5-10% in December 2020 on the year-on-year basis due to the fact
that commodity prices dropped continuously. On the cumulative and
year-on-year basis, Taiwan's CPI and WPI from January 1st till December
31st of 2020 drop by 0.23% and 7.80% respectively.
As for exchange rate, the NTD went further stronger due to the relatively
weaker USD as well as flowing in capital. The NTD/USD stood at 28.508
in late December 2020 indicating a 1.10% appreciation. Regarding
the interest rate, it remained low and steady in December 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 December 2020 stood at 0.079% and 0.082% respectively.
Business Outlook
The portion of manufacturing firms who perceived business were
better than expected in the target month was 48.8% or increased
by 10.0 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 13.4% or decreased
by 1.3 percentage points than 14.7% perceiving worse business of
the previous month. The portion of manufacturing firms who perceived
business remained constant in the target month was 37.9% or decreased
by 8.6 percentage points compared with 46.5% perceiving constant
business in the previous month. Overall, manufacturing firms perceived
the business in the target month was quite optimistic compared with
the previous month.
In addition, the portion of manufacturers who perceived business
would be better in the next six months was 33.0% in the target month
or increased by 2.1 percentage points than 30.9% feeling more optimistic
about the future in the previous month. The portion of firms who
perceived the economic outlook would be worsening was 14.9% or decreased
by 2.3 percentage points compared with 17.2% 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 52.1% or increased by 0.2 percentage points compared with
51.9% feeling neutral about the business outlook one month earlier.
Overall, manufacturing firms perceived the business in the near
future was also somewhat optimistic compared with the previous month.
The manufacturing composite indicator for December 2020 adjusted
for seasonal factors on moving average, saw an upward correction,
and from a revision of as 102.97 points in November 2020 moved up
to 106.21 points. Figure 1 shows an increase of 3.24 points, the
eighth month of consecutive increase.
The TIER service sector composite indicator for December 2020 adjusted
for seasonal factors on moving average also saw a downward correlation,
and from a revision of as 96.54 points in November 2020 moved down
to 96.52 points. Figure 1 shows a mild decrease of 0.02 points,
the first dip after a one-month mount.
In addition, the TIER Construction Sector Composite Indicator for
December 2020 adjusted for the seasonal factors on moving average
also saw a downward correlation, and from a revision of 109.23 points
in November 2020 went down to 108.96 points. Figure 1 shows a decrease
of 0.27 points, the third month of decrease in a row.
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 December
survey and are expected to deteriorate over the next six months
include:
Restaurants and Hotels.
● 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:
Cutlery and Tools Manufacturing, Audio and Video Electronic Products
Manufacturing.
● 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:
Transport Equipment Manufacturing and Repairing, Motor Vehicles
Manufacturing, Motor Parts 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:
Printing, Non-metallic Mineral Products Manufacturing, Cement and
Cement Products Manufacturing, Metal Dies, Data Storage Media Units
Manufacturing and Reproducing, Electronic Parts and Components Manufacturing,
Bicycles Manufacturing.
● 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:
Manufacturing, Food, Frozen Food Manufacturing, Edible Oil Manufacturing,
Flour Milling and Grain Husking, Soft Drink Manufacturing, Chemical
Products Manufacturing, Rubber Products Manufacturing, Plastic Products
Manufacturing, Porcelain and Ceramic Products Manufacturing, Machinery
and Equipment Manufacturing and Repairing, Electronic Machinery,
Construction, Basic Civil Structure Construction, Retail Sales,
Banks, Insurance.
● Manufacturers' sentiments that have improved in the December survey
and is expected to deteriorate over the next six months include:
Motorcycles Manufacturing, Motorcycles Parts Manufacturing.
● Manufacturers' sentiments that have improved in the December survey
and is expected to remain upbeat over the next six months include:
Textiles Mills, Yarn Spinning Mills, Fabric Mills , Apparel, Clothing
Accessories and Other Textile Product Manufacturing, Wood and Bamboo
Products Manufacturing, Paper Manufacturing, Industrial Chemicals,
Plastics and Rubber Raw Materials, Man-made Fibers Manufacturing,
Petroleum and Coal Products Manufacturing, Iron and Steel Basic
Industries, Fabricated Metal Products Manufacturing, Screw, Nut
Manufacturing, Metal Structure and Architectural Components Manufacturing,
Industrial Machinery, Electrical Machinery, Electrical Machinery,
Supplies Manufacturing and Repairing, Electric Wires and Cables
Manufacturing, Communications Equipment and Apparatus Manufacturing,
Bicycles Parts Manufacturing, Precision Instruments Manufacturing,
Education and Entertainment Articles Manufacturing, Wholesale, Securities.
● Manufacturers' sentiments that have improved in the December survey
and the trend is expected to continue for the next six months include:
Slaughtering, Prepared Animal Feeds Manufacturing, Leather, Fur
and Allied Product Manufacturing, Petrochemicals Manufacturing,
Glass and Glass Products Manufacturing, Electrical Appliances and
Housewares Manufacturing, Real Estate Investment, Telecommunication
Services, Transportation and Storage.
TIER Forecast (issued on 25th January, 2021.)
(NT$100 million, Chained (2016) Dollars)
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