Taipei: Taiwan’s economy showed heightened activity in October and was moving closer to an overheating range, according to the latest economic monitoring indicators issued by the National Development Council (NDC). The composite index of economic indicators, which gauges overall economic conditions, rose one point from a revised 34 in September to 35 in October, flashing a yellow-red light in the 32-37 range, indicating an economy that is getting hotter, NDC data showed.
According to Focus Taiwan, the NDC uses a five-color system to depict economic trends: red for overheating (38-45), yellow-red for heating up (32-37), green for stable growth (23-31), yellow-blue for a slowdown (17-22), and blue for contraction (9-16). Of the index’s nine components, only the stock price subindex changed, moving from yellow-red to red as the local stock market hit new highs. The other eight indicators remained unchanged.
The indexes for M1B money supply growth stayed yellow-blue, while overtime hours remained green. The indexes for industrial production, exports, imports of machinery and electrical equipment, and manufacturing sales all continued to flash red. Meanwhile, the wholesale, retail, and food and beverage revenue indicators stayed yellow-red, while manufacturers’ business sentiment remained blue.
The index of leading indicators, which predicts changes in the future economy, rose 0.41 percent to 101.18, supported by stronger export orders, stock prices, and manufacturing sentiment. The index of coincident indicators, which offers a picture of the current economic situation, edged down 0.09 percent to 104.85 due to mild softness in non-tech industries, according to the NDC.
Chen Mei-chu, head of the NDC’s Department of Economic Development, stated that the monitoring indicators could move even closer to red in the final two months of the year because AI-driven export demand remains strong. The indicators should also get a small boost from consumption, she noted.
Domestic demand improved in October as the retail and catering sectors returned to positive growth, and that trend is expected to continue in November and December, further strengthening overall consumption. Among the factors contributing to the positive trend were Taiwan citizens receiving a NT$10,000 (US$320) cash handout, incentives offered to replace old vehicles, and major concerts being held.
Chen also mentioned that the United States’ tariff policy should only have a limited short-term impact as companies and government agencies adapt, adding that “the worst period has passed.”