Taiwan's Economic Indicator Slips to 16-month Low of 21 in March

Taiwan's overall monitoring index fell three points in March from a month earlier to the 16 month low of 21, to show "yellow-blue" to signal economic slowdown to be the first for 2015, according to the National Development Council (NDC) of the Taiwan Cabinet.

The NDC points out such result indicates the island's economy still being on a moderate growth path, but with increasing uncertainties.

The council ascribes such lukewarm growth mostly to the island's disappointing March performance in exports and imports, with the weak exports caused by tepid global demand and export impacted by weak oil prices.

Senior council officials say Taiwan's exports are not likely to rally in the short term unless oil prices begin to pick up, adding that the unsettled Greek bailout program and slowing mainland Chinese economy are also hurting global demand.

Also the island ended March with only acceptable results in electromechanical equipment imports, as shown by the indicator representing this sector going from “yellow-red” to “yellow-blue”.

NDC uses a 5-color indicator to represent the state of the island's economic activity, with red suggesting serious overheating, yellow-red suggesting slight overheating, green suggesting steady growth, yellow-blue suggesting slowdown and blue suggesting recession.

Council officials fear such import slowdown could discourage businesses on the island from investing this year, but lessened the severity of its prediction by saying the higher comparable base of the same month last year only somewhat exaggerates the relatively deep recession in March this year.

While NDC officials paint the picture, however, the reality is that Taiwan Semiconductor Manufacturing Co. (TSMC), recognized as the world's No.1 pure contract-chip maker, has announced cutting its capital expenditure for this year from last year's level.

In spite of the March slowdown, the council expects the island's economic indicators to stop slipping in April mostly thanks to the island's rallying stock market, which briefly exceeded the 10,000 barrier recently to have stirred positive sentiment among institutional investors, without reportedly drawing in retail investors, which could result in more disposable cash flowing into private consumption.