08.28.2001
Index of leading indicators continues to stabilize

• Development: In July, the composite index of leading indicators increased slightly (0.1% MoM) following June’s 0.3% rise when index recovered to positive territory after 16 months of consecutive decline.

• Analysis: Only M1b money supply and wholesale prices have improved. Export value, new manufacturing orders, average monthly working hours in manufacturing, stock prices and floor area permits for construction have deteriorated.

• Primasia View: We believe that Taiwan’s GDP will shrink 1.8% YoY in 2001. In 2Q01 GDP contracted 2.4%, we forecast -3.0% in 3Q01 and -0.9% in 4Q01. Recovery should become more evident in 1H02, after the traditionally weak first quarter.