Another very bad surprise for the markets to digest today. Surprises are never good but shockingly bad surprises are even worse.
As the Taiwanese economy officially enters a recession for the first time since 2001, analysts are predicting the contraction this year may run much deeper than the one eight years ago.
Taiwan's gross domestic product declined by a record 8.36% in the last quarter of 2008 from the year-earlier period, according to provisional figures released Wednesday.
The steep, higher-than-expected decline, which came on the heels of a 1.05% contraction in the third quarter, pared Taiwan's full-year economic growth to a mere 0.12%, after it rose as much as 5.7% in 2007.
The Directorate General of Budget, Accounting and Statistics also forecast Taiwan's economy will shrink 2.97% in 2009, more than the 2.17% drop in 2001. But analysts see a much bigger contraction.
In a report released Thursday, UBS Research economist Sean Yokota slashed his 2009 GDP forecast for Taiwan to 6.1% from an earlier estimate of a 1.6% decline.
HSBC Global Research economists also cut their 2009 GDP estimate to a negative 5.2%, from minus 0.7% predicted earlier.
