Taiwan cuts growth view

TAIPEI: Taiwan’s government lowered its 2015 growth forecast to the lowest since 2009 as an export slump weighs on the island’s economy.

The statistics bureau projects gross domestic product to rise 1.06% this year, down from 1.56% estimated in August, according to a statement released yesterday in Taipei.

The economy contracted by 0.63% last quarter, compared with the 1.01% decline in the preliminary report and the median forecast in a Bloomberg survey of economists that saw a 1% drop.

Demand from Taiwan’s top buyer China has weakened, the electronics cycle is in a downturn and local firms are facing stiffer competition from their mainland rivals.

Domestic consumption, a pillar of growth earlier this year, also slowed last quarter as an equity slide added to the effects of the export slowdown.

The official 2015 growth forecast would mark the slowest expansion since 2009, when the economy contracted by 1.6%.

Taiwan’s central bank in September reduced its benchmark rate for the first time in six years to 1.75% from 1.875%. Its next decision comes next month.

“The central bank is likely to follow this with additional easing measures, as the sharp decline in domestic demand growth in the third quarter might not reverse quickly given China’s slowdown and trade stagnation,” Goldman Sachs economists wrote in a recent research note.