Taiwan sank into recession in October-December, data showed yesterday, posting its slowest annual growth in six years, with weak international demand and greater competition from China hitting the export-dependent island.
The growth rate of 0.85% in 2015 missed an earlier official forecast of 1.06%.
The full-year figure was dragged down by an unexpected contraction in the three months through December, the second straight quarter of declines that meets the definition of a technical recession.
“Inventories of electronic products continue to be digested, affected by weak global growth,” the Directorate General of Budget, Accounting and Statistics said in a statement. It also cited the rise of technology manufacturing – a key sector for Taiwan - in China and declines in raw materials as factors for the struggling economy.
Taiwan’s economic woes come as China’s economy last year slowed to 6.9%, its weakest annual rate in 25 years.
China is Taiwan’s biggest export market, accounting for a quarter of products shipped.
Exports fell by a 10th last year, with sales to China dropping 12.3% from the previous year. The government has been trying to spur the economy, cutting its key interest rate twice in the last two quarters and pushing a stimulus package to boost consumer spending. Taiwanese frustrated at the anaemic economy this month elected Tsai Ing-wen from the main opposition party as the island’s new leader, setting the stage for frostier ties with the mainland.
Current president Ma Ying-jeou, who was elected on a platform of greater engagement with China, has seen his popularity hit record lows due to his policies failing to translate into higher salaries and better job prospects.
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