Taiwan's economy contracted unexpectedly in the second quarter of 2012 as debt worries in Europe damped exports, forcing the government to lower its growth outlook, data from the Directorate General of Budget, Accounting & Statistics (DGBAS) showed Tuesday.
The gross domestic product fell 0.16 percent year-on-year in the second quarter against expectations for a 0.5 percent growth. This was the first decline in economic output since the third quarter of 2009, when GDP was down 1.41 percent.
The worse than expected outcome follows a 0.39 percent expansion in the first quarter and a 1.85 percent growth in the final quarter of 2011. On a seasonally adjusted basis, the GDP rose by an annualized 3.16 percent quarter-on-quarter.
The DGBAS lowered the growth forecast for the economy this year to 2.08 percent from the previously projected 3.03 percent.
According to the statistical agency, Taiwan's exports may weaken going forward due to impacts of the European debt crisis and slowdown in major economies. The outlook for world trade in 2012 is fragile, it added.
The statistical agency said that the weak trade activity due to a slowdown in global demand, coupled with sluggishness in the domestic sector, contributed negatively to the GDP in the second quarter.
Exports fell 1.73 percent year-on-year in the second quarter, while imports dropped 3.44 percent. However, consumer spending rose 0.87 percent and government consumption was up 2.58 percent.
On the other hand, investment dropped 8.35 percent annually, and domestic demand was down 1.05 percent.
Taiwan's central bank kept its benchmark interest rate unchanged at 1.875 percent in June and said downside risks to global economic outlook remain high.
by RTT Staff Writer
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