Taiwan’s major industries saw business climate declines in February, with the Taiwan Institute of Economic Research (TIER) warning that oil prices nearing US$140 per barrel could trigger a global recession. 

The institute announced on Wednesday that February’s business climate indicators fell across manufacturing, services, and construction, primarily due to fewer working days from the Lunar New Year holiday. Manufacturing dropped to 96.41 points, down 2.10 from January; services to 94.55, down 0.87; and construction to 95.8, down 4.11. Exports, production, and orders weakened, making firms more cautious. 

On the Middle East conflict, Institute President Dr. Chang Chien-yi (張建一) noted rising inflation pressures from damaged energy facilities. Even with a ceasefire, supply chains would take time to recover, keeping oil prices high at around US$90-100 per barrel and influencing central bank policies and interest rates. Stock market volatility could curb wealth effects and consumption. 

Macroeconomic Forecasting Center Director Sun Ming-te (孫明德) stated that each $10 rise in oil prices could shave 0.1-0.2 percentage points off global growth. With prices up from US$60 to US$90, international forecasts cut global growth from 2.9% to 2.7%. Sun projected that if the conflict ends by late March or early April, impacts remain manageable, with a third-quarter rebound possible. However, sustained high prices near US$140 risk recession. 

The Middle East supplies key materials like petrochemicals, urea, sulfur, aluminum, and helium, beyond oil, that are now disrupted and affect Taiwan's tech and agriculture sectors, Sun warned, with impacts limited so far but expanding if the conflict drags past mid-April. 

Regarding construction, TIER’s Taiwan Industry Economics Database Research Director Liu Pei-chen (劉佩真) cited fewer workdays and adjustments to new soil regulations slowing projects. Six major cities saw building transfers drop 42.5% monthly and 32.8% yearly. Despite central bank easing on second-home loans, high costs and firm seller prices stall transactions, delaying market recovery.