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Taiwan cuts 2012 growth forecast to 1.6 percent

TAIPEI, Taiwan (AP) — Taiwan's government has lowered its 2012 economic growth forecast to 1.6 percent as foreign demand for the island's electronics exports weakens.

The new forecast released Friday would be Taiwan's weakest growth since the global financial crisis caused a global recession in 2009.

The island's economy grew 0.4 percent in the first quarter of this year and shrank 0.2 percent in the second quarter, the first quarterly contraction since 2009.

Officials blame the deteriorating outlook on Europe's debt crisis and slowing growth in China, the island's largest export market.

Taiwanese exports drive the island's economic growth but they fell 5.8 percent to $171.6 billion in the first seven months of 2012.

Smartphones, computer memory chips and flat-screen panels have all suffered sharp sales declines.

Taiwan's economy contracted 1.8 percent in 2009.