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Talk of the day -- Economy remains red hot but confidence drops

Talk of the day -- Economy remains red hot but confidence drops

Taiwan's economic monitoring indicator flashed a red light in April for the fourth month in a row, which is normally an indication that the domestic economy remains overheated.
It was the first time the economy has flashed a red light for four consecutive months on the five-color gauge designed by the Council for Economic Planning and Development (CEPD) to evaluate the country's economic performance.
However, the recent global economic turbulence seems to have dampened consumer confidence, as the Consumer Confidence Index has dropped for the first time in eight months, according to a National Central University survey released Thursday.
The following are excerpts from local media coverage of the issue: China Times: The overall economic performance score remained unchanged at 39 points, with the sub-index of direct and indirect finance turning yellow-blue after 16 months of showing blue, according to the latest CEPD monitoring data released Thursday.
On the CEPD-designed five-color assessment scale, red means overheated; yellow-red signals an economy that is heating up; green shows stable growth; yellow-blue indicates a slowdown; and blue reflects a recession.
Downplaying the unprecedented record of the benchmark monitoring indicator showing red for four consecutive months, CEPD Vice Chairman Hu Chung-ying attributed the result mainly to the fact that the comparison base in the same period of last year was extremely low amid the worldwide economic recession at that time.
With the economy continuing to gain momentum and the low comparison base for last May, Hu said the probability of seeing a fifth red light for May is very high.
However, he cautioned that the phenomenon should only be interpreted as a recovery from the year-long recession rather than being seen as a sign of an overheated economy. (May 28, 2010).
Economic Daily News: Thanks to increased private investment, the sub-index of direct and indirect finance finally rose to yellow-blue after having received the lowest possible blue rating for more than a year, Hu said.
Among proposed major private investment projects worth more than NT$10 billion each, 17 have already been launched, Hu said, adding that Cheng Shin Tire is also planning to a massive investment program in Changhua County.
Nevertheless, Hu said, private consumption remained weak in April, while the unemployment rate was still high.
"Generally speaking, our economy is still far from overheating, given the sluggish domestic consumption and persistently high jobless rate, " he said, adding that there is still a lot of room for improvement in terms of domestic demand.
According to the latest CEPD report, the sub-index for wholesale, retail and food services lost one point, retreating back to a yellow-red rating from the red level of the previous month. (May 28, 2010).
Commercial Times: The composite leading index stood at 109.6 points in April, up 0.4 percent from March, but its annualized six-month rate of change dropped 2.8 percentage points to 13.4 percent, resulting in a decline of the index for a third consecutive month.
The figures were a signal that the pace of economic growth in the coming six months could gradually slow down, Hu said, adding that the momentum of growth in the second half of this year is not expected to be as strong as that of the first half. (May 28, 2010).
United Daily News: National Central University's Research Center for Taiwan Economic Development said in a report Thursday that its consumer confidence index edged down 2.68 points to 76 this month, mainly because of a plunge of 15.6 points on the sub-index for equity investment in the near future.
In addition, the report said, public confidence on purchasing durable goods over the next six months also decreased. "The drop in these two indexes suggest that investors are uncertain on asset prices in the near future due to European debt crisis and credit tightening measures, " said Hsu Chih-chiang, the center's director.
(May 28, 2010).
(By Sofia Wu)




Updated : 2021-04-10 19:08 GMT+08:00