Taiwan's
local manufacturing sector will likely flash a "blue light"
indicating a contraction for the entire 2015 amid a slowing global economy,
which has weakened demand in the world market and affected Taiwan's export
performance, according to the Taiwan Institute of Economic Research.
The TIER
said that a plunge in international crude oil prices has meanwhile cut
manufacturers' pricing power and prompted many buyers to put their purchase
plans on hold, which has further hurt Taiwanese exporters' bottom lines.
For the
third quarter of this year, the TIER said that the composite index for the
local manufacturing sector is expected to flash a blue light, indicating a
contraction, and echoing the latest government data, which showed that Taiwan's
gross domestic product for the July-September period contracted 1.01 percent
from a year earlier.
The
institute uses a five-light system to describe economic activity, with red
indicating overheating, yellow-red showing fast growth, green representing
stable growth, yellow-blue signaling sluggish growth and blue reflecting a
contraction. The gloomy forecast made by the TEIR came after the think tank
released the September composite index for the local manufacturing sector. The
September figure fell to 9.34 points from the 9.43 points seen in August, and
continued to flash a blue light for the sixth consecutive month.
In
September, two of the five factors in the composite index trended lower: the
sub-index for raw material purchases fell 0.34 points from a month earlier, and
the sub-index for operating costs dropped 0.07 points, the TIER said. However,
the sub-indexes for product prices, demand and the business environment for
September gained 0.17 points, 0.08 points and 0.07 points from a month earlier,
respectively, the think tank said.
In terms of
sub-sectors in the manufacturing sector, the TIER said that a supply glut in
the global oil market remained in place, keeping crude oil prices at lows, and
that this has dragged down prices of Taiwan-made petrochemical products.
Therefore, the local petrochemical and rubber sector flashed a blue light in
September.
The local
metal and machinery sector meanwhile felt the pinch of impact from escalating
global competition and lingering weakening demand, so the sector also continued
to flash a blue light in September.
At the same
time, the local electronics component sector has been affected by on-going
inventory adjustments in the global semiconductor industry and slowing
shipments in handheld devices, including smartphones, the TIER said, adding the
sector flashed a blue light in September, compared with a yellow-blue light
seen in August.
In the
computers, optoelectronics and other electronics device sector, the composite
index improved to a yellow-blue light from a blue light as the launch of the
Windows 10 operating system by Microsoft Corp. sparked a wave of equipment
replacements and purchases.
source: focustaiwan