Taipei:Taiwan's economy sustained its strong momentum in August, with an index measuring economic conditions showing a "red" light, indicating a booming economy. This marks the ninth consecutive month of such performance, driven by strong exports and a robust stock market amid a global artificial intelligence boom, according to the National Development Council (NDC) on Tuesday.
According to Focus Taiwan, the data compiled by the NDC revealed that the August composite index of economic indicators remained stable at 41 points, unchanged from July. This "red" light has persisted for nine months, tying the record for the longest period of economic expansion set between February and October 2021, when the economy rebounded following the COVID-19 pandemic.
The NDC's five-color system uses red to signal a booming economy or possible overheating, green for stability, and blue for weakness. Yellow-red and yellow-blue indicate transitions between these states. The "red" light category score ranges from 38 to 45, and the composite index previously hit a high of 42 points in January 1984.
All nine components of the August composite index remained unchanged from July. Share prices, industrial production, merchandise exports, imports of machinery and electrical equipment, manufacturing sales, and revenue from retail, wholesale, and food and beverage sectors all showed "red" lights, signaling a booming economy. The money supply showed a "green" light, indicating stability, while overtime hours in industrial and service sectors and manufacturers' business sentiment were "yellow-red," denoting a transition between stability and growth.
Chen Mei-chu, head of the NDC's Department of Economic Development, suggested that Taiwan's economy might continue to flash red in September due to the ongoing AI boom and the traditional peak season in the global tech market, which are expected to further boost exports and private investment. Despite potential challenges from rising U.S. Treasury yields, heavy investments in AI infrastructure by cloud service providers are anticipated to sustain Taiwan's economic momentum.
In August, the leading indicators index, which predicts economic performance for the next six months, rose by 0.51 percent from the previous month to 104.41. This marks the 13th consecutive month of increase, driven by export orders, share prices, new construction projects, semiconductor equipment imports, and improved business sentiment among manufacturers. However, money supply and employment subindexes showed declines. Over the 13-month period, the leading indicators index has risen by 6.06 percent, primarily due to a strong stock market and increased exports and semiconductor equipment imports.