Stronger domestic investment moderating Taiwan's economic downturn: CDRI

However, the number of people employed in the service sector has become even lower

Taipei 101

Taipei 101 (CNA photo)

TAIPEI (Taiwan News) - Taiwan's economic growth is predicted to continue to decline but at a slower pace thanks to stronger business investment, according to a report issued by the Commerce Development Research Institute (CDRI, 商業發展研究院) on Thursday.

The government-funded organization said the Business Cycle Coincident Composite Index began to fall since the beginning of 2018, while the pace accelerated in the second half of 2018, culminating in the first half of 2019. Yet the falling pace is forecast to slow down due to larger business investment.

The return of formerly foreign-based Taiwanese investors and the relocation of their production sites have been commencing the new opportunity of value transformation, but it also comes with the challenge of value creation, said the report, with a comprehensive stimulus package is strongly recommended.

The report said the improvement of trade deficit in the service industry remains contained, while “Real GDP of Transportation & Warehousing”, “Net Rate of Employment Increment in the Service Industry” and “Case of First-time Unemployment Benefit Claims” have all worsened continuously. In contrast, the real estate sector and residential services sector have increased slightly.

Further, although the number of people employed in the service sector during this period was only a bit lower than the long-term trend, the leading indicator of employment has already shown signs of worsening, which might have negative impact on the economy in the near future.