Taiwan's economic indicator flashed 3rd consecutive ‘green' light in Dec. 2004

Taipei, Jan. 31, 2005 (CENS)--The monitoring indicator for Taiwan's economic performance flashed a ‘green' light for the third consecutive month in December of 2004, with composite index scores tumbling three points to 25, according to the Cabinet-level Council for Economic Planning and Development (CEPD).

In the same month, the industrial production index dropped by 1.8% due to the slow growth of global electronics industry and the shrinking market demand in the United States and mainland China. In addition, the soaring prices of raw materials for the textile industry, caused by the cancellation of the Multi-Fiber Agreement on global textile quotas in 2005, also served to undermine the island's industrial production.

As a result, the composite index scores sharply declined from the previous month's 28 points to 25 points, only two points higher than the ‘yellow-blue' light. This indicated a decline in economic performance.

A senior official at CEPD analyzed that Taiwan's economic growth started to slow down in the fourth quarter of last year because of oil price hike in the international market, the rising interest rates in the United States, and mainland China's microeconomic control policy. All these remain variables that might influence the island's monitoring indicator for this month.

In December of 2004, both the leading economic indicator and coincident indicator turned downward, with the former dropping 1.1% from a month earlier to 104.2 and the latter down 2.4% to 108.

Among the components that showed negative contributions to the leading indicator included wholesale price index, MFG's new orders, MFG's average monthly working hours, and exports by customs. As for the factors that form the coincident indicator, both industrial production index and MFG production index turned negative.

A survey done last December by CEPD showed that only 11% of the polled manufacturers foresaw a better economic climate in the next three months, down one percentage point from the previous month's 12%; and those who expected a worse climate fell to 17% from 20%. However, up to 72% of the polled predicted the climat would remain unchanged, up four percentage points from 68%.