The Taiwanese Economy in November 2020
A new variant of COVID-19 has found in Europe and intrigue its
tepid hope of economic recovery. Major forecasting centers in the
world has revised their forecast of European economic growths for
2020 and 2021 downward in response to said uncertainty. By comparison,
other major economies, such as the US, Japan, and China; their businesses
have mostly been gradually recuperating. Nevertheless, the composite
indicator of manufacturing issued by the Taiwan Institute of Economic
Research (TIER) signal optimism in November.
Taiwan's exports in November 2020 increased by 12.03% compared with
the same month of 2019 thanks to a strong market demand for ICT
parts and components. Regarding imports, Taiwan's imports in November
2020 increased by 10.04% compared with imports in November of 2019.
On the cumulative basis, Taiwan's exports and imports from January
1st till November 30th of 2020 actually grew by 4.20% and 0.23%
compared with the same period of previous year. The trade surplus
during the period stood at US$ 53.03 billion or increased by 29.24%
on the year-on-year basis.
Taiwan's consumer price index (CPI) increased by 0.09% in November
2020 compared with the same month of previous year due to the recovering
domestic demand despite of still decreasing global crude oil and
commodity prices. The CPI has been mild with its first hike after
9 months of decrease in a row; however, the CBC trusts that there's
no deflation for now and ever. The core inflation rate excluding
prices of the energy and food increased by 0.78% in November 2020.
In addition, the wholesale price index (WPI) decreased by 6.22%
in November 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 November 30th
of 2020 drop by 0.26% and 8.07% 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 28.824
in late November 2020 indicating a 0.35% appreciation. Regarding
the interest rate, it remained low and steady in November 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 November 2020 stood at 0.077% and 0.080% respectively.
Business Outlook
The portion of manufacturing firms who perceived business were
better than expected in the target month was 39.6% or increased
by 9.3 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 16.1% or decreased
by 6.9 percentage points than 23.0% perceiving worse business of
the previous month. The portion of manufacturing firms who perceived
business remained constant in the target month was 44.3% or decreased
by 2.4 percentage points compared with 46.7% perceiving constant
business in the previous month. Overall, manufacturing firms perceived
the business in the target month was optimistic to a certain degree
compared with the previous month.
In addition, the portion of manufacturers who perceived business
would be better in the next six months was 32.5% in the target month
or increased by 6.6 percentage points than 25.9% feeling more optimistic
about the future in the previous month. The portion of firms who
perceived the economic outlook would be worsening was 16.7% or decreased
by 1.7 percentage points compared with 18.4% 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 50.8% or decreased by 4.9 percentage points compared with
55.7% feeling neutral about the business outlook one month earlier.
Overall, manufacturing firms perceived the business in the near
future was also optimistic compared with the previous month.
The manufacturing composite indicator for November 2020 adjusted
for seasonal factors on moving average, saw an upward correction,
and from a revision of as 101.20 points in October 2020 moved up
to 103.11 points. Figure 1 shows an increase of 1.91 points, the
seventh month of consecutive increase.
The TIER service sector composite indicator for November 2020 adjusted
for seasonal factors on moving average also saw an upward correlation,
and from a revision of as 96.82 points in October 2020 moved up
to 96.84 points. Figure 1 shows an increase of 0.02 points, the
first month of increase after a one-month dip.
In addition, the TIER Construction Sector Composite Indicator for
November 2020 adjusted for the seasonal factors on moving average
saw a downward correlation, and from a revision of 111.45 points
in October 2020 went down to 109.23 points. Figure 1 shows a decrease
of only 2.22 points, the second 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 November
survey and are expected to deteriorate over the next six months
include:
Leather, Fur and Allied Product Manufacturing.
● Manufacturers' sentiments that have been in decline in the November
survey, but are expected to improve over the next six months include:
None.
● Manufacturers' sentiments that have been in decline in the November
survey and are expected to remain sluggish over the next six months
include:
Apparel, Clothing Accessories and Other Textile Product Manufacturing,
Cutlery and Tools Manufacturing, Restaurants and Hotels.
● Manufacturers surveyed who felt the November outlook was the same
as the previous month, but the outlook is expected to exacerbate
over the next six months include:
None.
● Manufacturers surveyed who felt the November outlook was the same
as the previous month, but the outlook is expected to improve over
the next six months include:
Fabric Mills , Wood and Bamboo Products Manufacturing, Paper Manufacturing,
Man-made Fibers Manufacturing, Non-metallic Mineral Products Manufacturing,
Cement and Cement Products Manufacturing, Bicycles Manufacturing,
Precision Instruments Manufacturing.
● Manufacturers surveyed who felt the November 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 , Soft Drink
Manufacturing , Prepared Animal Feeds Manufacturing, Textiles Mills,
Yarn Spinning Mills, Rubber Products Manufacturing, Plastic Products
Manufacturing, Porcelain and Ceramic Products Manufacturing, Metal
Dies, Screw, Nut Manufacturing, Machinery and Equipment Manufacturing
and Repairing, Electrical Machinery, Supplies Manufacturing and
Repairing, Electronic Machinery, Audio and Video Electronic Products
Manufacturing, Motor Parts Manufacturing, Banks.
● Manufacturers' sentiments that have improved in the November survey
and is expected to deteriorate over the next six months include:
Petroleum and Coal Products Manufacturing, Motorcycles Manufacturing,
Motorcycles Parts Manufacturing, Construction, Real Estate Investment.
● Manufacturers' sentiments that have improved in the November survey
and is expected to remain upbeat over the next six months include:
Industrial Chemicals, Plastics and Rubber Raw Materials, Metal Structure
and Architectural Components Manufacturing, Communications Equipment
and Apparatus Manufacturing, Data Storage Media Units Manufacturing
and Reproducing, Electronic Parts and Components Manufacturing,
Bicycles Parts Manufacturing, Education and Entertainment Articles
Manufacturing, Wholesale, Securities.
● Manufacturers' sentiments that have improved in the November survey
and the trend is expected to continue for the next six months include:
Printing, Petrochemicals Manufacturing, Chemical Products Manufacturing,
Glass and Glass Products Manufacturing, Iron and Steel Basic Industries,
Fabricated Metal Products Manufacturing, Industrial Machinery, Electrical
Machinery, Electric Wires and Cables Manufacturing, Electrical Appliances
and Housewares Manufacturing, Transport Equipment Manufacturing
and Repairing, Motor Vehicles Manufacturing, Basic Civil Structure
Construction, Retail Sales, Insurance, Telecommunication Services,
Transportation and Storage.
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