EDITORIAL:
Uncertainties ahead for economy
A gain in exports last month added to a slew of positive economic data that
indicate a rosy outlook for Taiwan in the second half. The nationˇ¦s economic
recovery looks under way, but uncertainty remains because of the USˇ¦ stimulus
tapering and its effects on emerging markets.
Taiwanˇ¦s exports grew for the fourth consecutive month last month, according to
the statistics released by the Ministry of Finance. Exports increased 3.6
percent annually to US$25.64 billion, benefiting from Chinaˇ¦s inventory buildup
for next monthˇ¦s shopping season and economic recovery in the US and Europe.
Other government data issued by the Council for Economic Planning and
Development (CEPD) earlier this month also indicated that Taiwanˇ¦s manufacturing
sector was expanding at a stable pace, as reflected by acceleration of new
orders, at 55.1 percent. The Purchasing Managersˇ¦ Index released by the CEPD was
unchanged at 52.6 percent last month from July. What is more striking is that
the figure for business prospects over the next six months returned to positive
territory at 53.3 percent, snapping five months of decline.
However, those seemingly encouraging numbers hide signs of potential weakness
ahead. As the US Federal Reserve is widely expected to begin cutting bond
purchases from its current level of US$85 billion per month from this month, the
IMF has warned emerging countries to cooperate to fend off potential adverse
repercussions for their economic growth.
An indicator of the economic future can be seen in Taiwanˇ¦s decelerating exports
to ASEAN members. Last month, ASEAN exports increased at their slowest annual
rate over the past four months, gaining 2.9 percent to US$4.78 billion, the
ministryˇ¦s tally showed. ASEAN is the nationˇ¦s second-biggest export
destination, accounting for 18.6 percent of total exports last month, surpassing
the US and Europe.
Looking into the details of export items last month, the growth did not cover
all sectors. Growth in the outbound shipments of chipmakers ˇX including Taiwan
Semiconductor Manufacturing Co, up 8.9 percent year-on-year to US$56.77 billion
ˇX helped the overall expansion in exports of electronic products. Electronics is
the pillar of Taiwanˇ¦s exports. Meanwhile, outbound shipments of information and
communication products, primarily mobile phones from HTC Corp, inched up 1.5
percent annually, but fell for a third consecutive month.
Imports were on the wane as well. Imports shrank for the second month to
US$21.06 billion, hitting their lowest level since Februaryˇ¦s US$18.81 billion.
Significantly, imports of capital equipment, manufacturing equipment in
particular, contracted 7.7 percent annually and 5.8 percent sequentially, to
US$2.73 billion. In other words, companies invested less in manufacturing
equipment, mostly because of weakening order visibility. That will mean a
reduction in private investment.
This year, GDP might grow by 2.31 percent year-on-year, as the government
projected. However, how about next year? Growing uncertainties about the Fedˇ¦s
monetary policy and its influence on the economies of emerging countries
threaten to weaken exports after orders for the Christmas shopping season. At
the same time, China, Taiwanˇ¦s biggest export destination, is likely to trim its
annual GDP growth forecast to 7 percent for next year from its previous estimate
of 7.5 percent.
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