Taiwan's economy contracts in 3rd quarter

Taiwan's economy contracted 1.02 percent in the third quarter from a year ago, its first decline since 2003, the government said Thursday.

Gross domestic product is also projected to shrink 1.73 percent in the current quarter and drop 0.31 percent in the first quarter of 2009, according to a statement on the Web site of the Directorate-General of Budget, Accounting and Statistics.

But the agency said it still expects an increase of 2.12 percent in GDP growth for the whole of 2009. It said that growth in 2008 would likely be 1.87 percent. Previously, it had forecast growth in the 3-4 percent range, down from 5.7 percent in 2007.

On Tuesday, Premier Liu Chao-shiuan announced the distribution of almost $2.5 billion in vouchers to Taiwanese in an attempt the stimulate the economy.

Liu said that the vouchers, which would be redeemable in retail shops, restaurants and supermarkets through the end of 2009, were expected to add more than 0.6 percentage point to the GDP growth rate.

During election campaigning earlier this year, President Ma Ying-jeou promised to boost the island's economy after several years of relatively slow growth under predecessor Chen Shui-bian.

But the worldwide economic slump has undermined the island's growth prospects, particularly by reducing the appetite in industrialized countries like the United States for Taiwan's high-tech exports.