The Taiwanese Economy in August 2020
The COVID-19 did cause severe impacts on major economies, such
as the US and Europe. However, the second quarter of these advanced
economies were actually not as bad as they were projected earlier.
For example: The US Bureau of Economic Analysis adjusted its estimation
of second quarter GDP growth rate upward by 0.4 percentage points.
In addition, the Eurostat also upward revised its GDP growth predictions
for both the EU 27 and EA19 for the second quarter by 0.2 and 0.3
percentage points respectively. Despite of remaining uncertainties,
the domestic demands for the time being have obviously helped pick
up manufacturing as well as service composite indicators issued
by the Taiwan Institute of Economic Research (TIER) over again.
Taiwan's exports in August 2020 increased by 8.32% compared with
the same month of 2019 thanks to a strong market demand for ICT
parts and components. Regarding imports, Taiwan's imports in August
2020 increased by 23.9% compared with imports in August of 2019
due to the expansion of major semiconductor companies. On the cumulative
basis, Taiwan's exports and imports from January 1st till August
31st of 2020 actually grew by 1.54% and -0.12% compared with the
same period of previous year. The trade surplus during the period
stood at US$ 33.18 billion or increased by 11.89% on the year-on-year
basis.
Taiwan's consumer price index (CPI) decreased by 0.33% in August
2020 compared with the same month of previous year due to the still
decreasing global crude oil and commodity prices. The CPI has been
decreasing for 7 months in a row; however, the CBC trusts that there's
no deflation for now. The core inflation rate excluding prices of
the energy and food increased by 0.31% in August 2020. In addition,
the wholesale price index (WPI) decreased by 9.09% in August 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 August 31st of 2020 drop
by 0.27% and 8.43% respectively.
As for exchange rate, the NTD went somewhat weaker due to the relatively
stronger USD as well as flowing out capital. The NTD/USD stood at
29.53 in late August 2020 indicating a 0.08% depreciation. Regarding
the interest rate, it remained low and steady in August 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 August 2020 stood at 0.079% and 0.088% respectively.
Business Outlook
The portion of manufacturing firms who perceived business were
better than expected in the target month was 35.3% or increased
by 6.0 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 19.0% or decreased
by 1.5 percentage points than 20.5% perceiving worse business of
the previous month. The portion of manufacturing firms who perceived
business remained constant in the target month was 45.7% or decreased
by 4.5 percentage points compared with 50.2% perceiving constant
business in the previous month. Overall, manufacturing firms perceived
the business in the target month was somewhat more optimistic than
the previous month.
In addition, the portion of manufacturers who perceived business
would be better in the next six months was 27.7% in the target month
or increased by 7.6 percentage points than 20.1% feeling more optimistic
about the future in the previous month. The portion of firms who
perceived the economic outlook would be worsening was 23.8% or decreased
by 0.8 percentage points compared with 24.6% 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 48.5% or decreased by 6.8 percentage points compared with
55.3% feeling neutral about the business outlook one month earlier.
Overall, manufacturing firms perceived the business in the near
future was also more optimistic compared with the previous month.
The manufacturing composite indicator for August 2020 adjusted for
seasonal factors on moving average, saw an upward correction, and
from a revision of as 96.39 points in July 2020 moved up to 98.83
points. Figure 1 shows an increase of 2.44 points, the fourth month
of consecutive increase.
The TIER service sector composite indicator for August 2020 adjusted
for seasonal factors on moving average also saw an upward correlation,
and from a revision of as 94.97 points in July 2020 moved up to
96.21 points. Figure 1 shows an increase of 1.24 points, the fifth
month of consecutive increase.
In addition, the TIER Construction Sector Composite Indicator for
August 2020 adjusted for the seasonal factors on moving average
saw a downward correlation, and from a revision of 107.66 points
in July 2020 went down to 106.98 points. Figure 1 shows a decrease
of 0.68 points, the first month drop after three months of consecutive
increase.
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 August
survey and are expected to deteriorate over the next six months
include:
Cutlery and Tools Manufacturing, Insurance.
● Manufacturers' sentiments that have been in decline in the August
survey, but are expected to improve over the next six months include:
Motor Vehicles Manufacturing, Real Estate Investment.
● Manufacturers' sentiments that have been in decline in the August
survey and are expected to remain sluggish over the next six months
include:
Leather, Fur and Allied Product Manufacturing, Chemical Products
Manufacturing, Machinery and Equipment Manufacturing and Repairing,
Electrical Appliances and Housewares Manufacturing, Bicycles Manufacturing,
Banks, Securities.
● Manufacturers surveyed who felt the August outlook was the same
as the previous month, but the outlook is expected to exacerbate
over the next six months include:
Petrochemicals Manufacturing, Petroleum and Coal Products Manufacturing,
Rubber Products Manufacturing, Screw, Nut Manufacturing, Electrical
Machinery, Supplies Manufacturing and Repairing.
● Manufacturers surveyed who felt the August outlook was the same
as the previous month, but the outlook is expected to improve over
the next six months include:
Frozen Food Manufacturing, Wood and Bamboo Products Manufacturing,
Plastics and Rubber Raw Materials, Cement and Cement Products Manufacturing,
Metal Structure and Architectural Components Manufacturing, Transport
Equipment Manufacturing and Repairing, Motor Parts Manufacturing,
Bicycles Parts Manufacturing, Education and Entertainment Articles
Manufacturing, Construction, Basic Civil Structure Construction.
● Manufacturers surveyed who felt the August outlook was the same
as the previous month and the trend is expected to continue for
the next six months include:
Manufacturing, Food, Slaughtering, Edible Oil Manufacturing, Flour
Milling and Grain Husking , Prepared Animal Feeds Manufacturing,
Yarn Spinning Mills, Fabric Mills , Paper Manufacturing, Industrial
Chemicals, Plastic Products Manufacturing, Non-metallic Mineral
Products Manufacturing, Porcelain and Ceramic Products Manufacturing,
Iron and Steel Basic Industries, Fabricated Metal Products Manufacturing,
Metal Dies, Industrial Machinery, Electrical Machinery, Electric
Wires and Cables Manufacturing, Electronic Machinery, Data Storage
Media Units Manufacturing and Reproducing, Wholesale, Telecommunication
Services, Transportation and Storage.
● Manufacturers' sentiments that have improved in the August survey
and is expected to deteriorate over the next six months include:
Glass and Glass Products Manufacturing, Restaurants and Hotels.
● Manufacturers' sentiments that have improved in the August survey
and is expected to remain upbeat over the next six months include:
Printing, Communications Equipment and Apparatus Manufacturing,
Motorcycles Manufacturing, Motorcycles Parts Manufacturing, Precision
Instruments Manufacturing.
● Manufacturers' sentiments that have improved in the August survey
and the trend is expected to continue for the next six months include:
Soft Drink Manufacturing , Textiles Mills, Apparel, Clothing Accessories
and Other Textile Product Manufacturing, Man-made Fibers Manufacturing,
Audio and Video Electronic Products Manufacturing, Electronic Parts
and Components Manufacturing, Retail Sales.
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