Taiwan narrowly dodged a recession in the third quarter even as the economy contracted for the first time since the global financial crisis, with exporters suffering a crippling blow from faltering global demand and a slowdown in China.
The worse-than-expected 1.01 percent slump in July-September gross domestic product was the first year-on-year contraction in six years, and prompted the government to announce a T$4.08 billion ($125.33 million) stimulus package to boost domestic consumption over the short term.
High-tech manufacturers in Taiwan's trade-reliant economy have been hurt by faltering demand in regional powerhouse China, along with other exporters from Singapore to Japan to Brazil.
"The biggest drag is exports due to the softening of China. That won't dissipate anytime soon and probably will drag on growth in the fourth quarter," said Emily Dabbs, economist with Moody's Analytics in Sydney.
Following the release of Friday's preliminary GDP figures, Premier Mao Chi-kuo told a news briefing that Taiwan's outlook will depend on how conditions evolve overseas, a tacit admission that policymakers have few answers to depressed global demand.
"We will do what we can with these short term measures," Mao said.
The year-on-year GDP decline was deeper than a forecast 0.6 percent drop in a Reuters poll, compared with 0.52 percent growth in the second quarter.
Taiwan barely escaped two consecutive quarters of contraction, would have put the economy in a technical recession for the first time since the depths of the financial crisis in 2009.
The economy grew by just 0.21 percent in the third quarter on a seasonally adjusted annualised basis (SAAR), after shrinking 6.56 percent in the second quarter from the first.