The Taiwan Institute of Economic Research announced yesterday the business climate index for manufacturing, services, and construction sectors for April. Due to the uncertainty of the U.S. mutual tariff policy, all three major industries saw declines. Manufacturing experienced a third consecutive month of decline, hitting its lowest point in nearly two years, while both the services and construction sectors fell for the fourth consecutive month, with services reaching its lowest since the COVID-19 outbreak and construction marking a new low since December 2022.

According to the survey by the Taiwan Institute of Economic Research, the business climate index for manufacturing in April was 90.9 points, a decline of 3.53 points from the previous month; the services index was 85.41 points, down by 3.03 points; and the construction index was 90.38 points, decreasing by 2.98 points. Zhang Jianyi, the president of the institute, stated that the simultaneous decline of the three indices reflects manufacturers' increasing pessimism about future uncertainties. Notably, the services index hit its lowest point since May 2020, mainly due to the fluctuating policies of U.S. President Trump.

He emphasized that the services sector faces reduced market activity, with the insurance sector being adversely affected by the appreciation of the New Taiwan Dollar, leading to a downturn in department store foot traffic. Retail sales in April were down 0.6% compared to the same month last year, while the domestic demand is not expected to perform as well as in the past two years.

Sun Mingde, director of the Economic Forecast Center, pointed out that the initial announcement of the U.S. mutual tariff significantly impacted market confidence, leading to a marked deterioration in manufacturers' outlook for the month. However, with Trump's policy shifts in May concerning China and the EU, the anticipated destruction of global trade by U.S. tariff policies appears to be somewhat exaggerated.

Regarding future implications, Zhang noted the possibility of tightened monetary policy in the U.S. With upcoming U.S. debt maturities and the potential for new money printing, the global uncertainty caused by U.S. policies persists, though it may become clearer in July if tariffs do not have the expected impact. If tax revenue declines or inflation rises, the Federal Reserve might face pressures to raise interest rates.

He also indicated that Taiwan's economy has a chance to achieve a growth rate of over 3% this year, with bright prospects for the first half of the year. From January to April, the manufacturing sector grew by 15%, particularly driven by AI-related information technology and electronic components. While most traditional industries performed well, sectors like chemicals and transportation (such as automobiles) did not fare as well.