Commerce Development Research Institute announced the latest forecast and analysis on the future direction of Service Industry today (9th). According to the latest data, the recovery of Taiwan Service Industry will continue to August, the only concern is that the strength in Q2 will be weaker compare to Q4 last year.
A. Recovery on thin ice in 2018
The Business Cycle Forecast Team says according to our Composite Leading Index which compiled base on NBER’s regulation of Comprehensive Indicator Compilation, the Business Cycle Coincident Composite Index for Taiwanese Service Sector will grow from 99.72% December last year to 100.09% this August.
The following paragraph of cycle history analyzation shows the weakness of the current recovery. Furthermore, the forecast this time is based on data till February, due to the “trade war” between America and China in March causing turbulence in digital currency and technology industry. Signal of risk soaring. The fragile foundation of Taiwan Commerce Service Industry is the reason for the pressure now imposing on international competence in new retail and new finance.
Regional politics and the relationship between two sides of Taiwan strait are both the variations that will impact on the recovery.
B. Compare to the cycles before, the recession this time is rather slight but the recovery slower than ever.
Business Cycle Index each month shown as below. “Cycle Index” shows the business cycle fluctuation, as the graphics below, the Coincident Index dropped to 97.38 in August 2009 from the financial crisis in 2008 and then rise to 100 after 17 months. Presented a classical V shaped recovery. Compare to the troughs in March 2005 (99.23) and July 2013(99.43), this time, March 2017 (99.45) the trough is far from deep, though the recovery is surprisingly slow. It is expected that the figure will be back to normal at 100 after 16 months later, which is July this year.
The Business Cycle Forecast Team points out that this is a “Low Balance” phenomenon which indicates the finance structure is still suffering from the repercussion of the financial crisis.
Cycles before:
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Cycle
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Trough
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Peak
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Trough
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1
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2003/7
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2004/10
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2005/3
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2
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2005/3
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2008/3
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2009/8
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3
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2009/8
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2011/8
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2013/7
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4
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2013/7
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2015/2
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2017/3
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