Macroeconomic conditions in Taiwan remain unfavorable

Growth should have stayed below potential in 2Q and is expected to continue doing so in 3Q, says DBS.

DBS Group Research noted:

Macroeconomic conditions remain unfavorable. Growth should have stayed below potential in 2Q and is expected to continue doing so in 3Q. Among the key leading indicators, export orders have remained flat as of May (0.2% MoM sa), and consumer confidence has dropped to a seven month low in June, which imply that both export and consumption demand will remain weak in the next 1-3 months. Money supply M1B, an indicator for the short term liquidity, has also decelerated (3.2% YoY in May, versus 3.8% in April).

Inflation, on the other hand, rose to a 5-month high of 1.8% YoY last month. Food prices (due to rainy weather) and prices of housing & public utilities (due to hikes in residential electricity prices) elevated the on-year inflation by 1.2ppt and 0.3ppt respectively. Inflation figures will remain relatively high for some months, given the arrival of the typhoon season and another hike in electricity prices scheduled in December.

On a positive note, inventory remains well managed in the manufacturing sector (inventory/shipment ratio: 0.99 in May), and capacity utilization should have increased (capital goods imports bottomed out in May). A resilient recovery in production and investment could be on the cards when external demand finally turns up.

Meanwhile, the surge in inbound tourists has continued to support retail sales and employment increment in the services sector, after the individual visitor scheme was expanded in March to incorporate residents in a larger number of Chinese cities.

In addition, the cost pressures facing the upstream producers have faded recently, thanks to the declines in global oil and commodity prices (WPI: - 1.7% YoY in June). This should help to improve the profit margins of local firms and reduce their incentives of passing costs onto end-consumers resulting from the increases in industrial electricity prices.

Also Read

Low inflation in Singapore unlikely to hold in 2Q24

Lower private transport costs ease inflation to 2.7% YoY in March

Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

I want to download the media kit