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Economy remains in contraction mode for 4th straight month: NDC

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Graphic: National Development Council

Taipei, March 27 (CNA) Taiwan's business climate monitor flashed a "blue" light in February for a fourth straight month, signaling that the local economy remained in contraction mode amid slumping exports, the National Development Council (NDC) reported Monday.

Last month, the composite index of monitoring indicators, which reflects the current economic situation, dropped by one point from January to 10 points, the lowest since April 2009, NDC data showed.

The sub-index for stock prices gained one point, improving to a yellow-blue light from a blue light in January, while the sub-indexes for exports and electrical and machinery equipment imports fell by a point to display a blue light, according to NDC data.

The NDC uses a five-color system to depict Taiwan's economic health, with blue indicating contraction, yellow-blue representing sluggishness, green signifying stable growth, yellow-red referring to a warming economy, and red signaling an overheated or booming economy.

Dual colors suggest transitions to stronger or weaker states.

"Weak global demand has dragged down the performance of Taiwan's exports, which has hurt production and sales and put companies under pressure to adjust their inventories," said Wu Ming-hui (吳明蕙), head of the NDC's Department of Economic Development.

"It will be difficult for Taiwan's economy to pull out of this downturn in the first half of the year," Wu said, echoing a previous forecast by NDC chief Kung Ming-hsin (龔明鑫) that Taiwan's economy would likely flash a blue light until the middle of the year.

Wu indicated, however, that Taiwan's economy could hit bottom in the coming months as signs of recovery emerged in the trend-adjusted index of leading indicators, which rose for the fourth consecutive month in February.

The Chung-Hua Institution for Economic Research's Purchasing Managers' Index (PMI) and the Taiwan Institute of Economic Research's composite index of manufacturing indicators also both rose in February, Wu noted.

Their upturns suggested that business confidence is picking up as companies believe their inventory adjustments are coming to an end, she said.

China's abrupt halt of its zero-COVID strategy has also benefited Taiwan's export-oriented economy, she said.

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