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.