This South Asian country slips into recession as Q1 GDP hits 14-year low

Taiwan's economy shrank for a second straight quarter at the start of 2023, the government said Friday -- its biggest quarterly contraction since the 2009 global financial crisis.

Gross domestic product in the first quarter plummeted by 3.02 percent year-on-year, according to preliminary figures released by the Directorate-General of Budget, Accounting and Statistics.

The statistics bureau has projected GDP will grow by 2.12 percent in 2023, revising the estimate down 0.63 percent from an earlier forecast.

"Real exports of goods and services dropped by 10.86% (yoy), mainly caused by the weak global demand and inventory adjustments. Imports also fell by 4.17%," the statistics bureau said.

Friday's numbers represented the second straight quarterly contraction after the government reported a decline for the last stretch of 2022 -- the first drop since the start of 2016.

Last year's slowdown was brought on largely by a then-worsening pandemic situation in China, Taiwan's largest trade partner.

Taiwan is one of the world's most important economies thanks to its outsized role in producing high-tech equipment -- particularly state-of-the-art semiconductors, an industry that it dominates.

The island weathered the outset of the coronavirus pandemic well, becoming one of the few economies to record growth in 2020.

In 2021 it saw an explosion of orders as the world began reopening after months of pandemic shutdowns. Demand for semiconductors was enormous and Taiwan's foundries could barely keep up.

But the industry has since been hit by an ongoing economic slowdown dampening demand, as well as a raft of US export controls aimed at preventing China from obtaining advanced chips.

Taiwan Semiconductor Manufacturing Company, the world's largest chip maker, warned this month in its earnings call that its second-quarter performance would be impacted by slowing consumer demand before business picks up later in the year.