DALTON TANONAKA, CNN ANCHOR, BIZASIA: Taiwan's economy was hit by its worst contraction in 26 years in the second quarter of this year. Gross domestic product falling 2.35 percent in 2Q from the same period a year ago, and that's must worst than the .2 percent fall analysts had been expecting. Taiwan's Central Bank responded by cutting key interest points effective Monday; that would bring the discount rate down to 3 1/4 percent. The government also forecasted a 0.37 percent contraction in GDP for the full year, and that's down from an earlier estimate of 4 percent growth given in May. Ahead of the announcement, Taipei's weighted index finishing 1 percent weaker as investors cashed in gains from earlier in the week. For a prospective on the numbers we're joined now from Taiwan by K.C. Lee, vice chairman of the Council for Economic Planning and Development, a government think-tank. Sir, this is significant, going from a projection of growth for the full year to a contraction.</s>K.C. LEE, COUNCIL FOR ECON. PLANNING & DEV.: Yes, this is the regular</s>TANONAKA: Well, Mr. Lee, go through the reasons for the contraction for us. What, corporate revenue? An order is sluggish? What else?</s>LEE: Well, I think the main reason for a contraction is -- in the past we describing very often our gross export. Now, you can operate</s>TANONAKA: Mr. Lee, real quickly, the central bank has, you know, cut interest rates in reaction. Will that help the economy?</s>LEE: Of course. I mean, this will be a big help to our economy. This will change our confidence and also change our expectation now because of the economy hit</s>TANONAKA: OK, K.C. Lee, Council for Economic Planning and Development in Taipei, thank you very much for the thoughts END TO ORDER VIDEOTAPES AND TRANSCRIPTS OF CNN INTERNATIONAL PROGRAMMING, PLEASE CALL 800-CNN-NEWS OR USE THE SECURE ONLINE ORDER FROM LOCATED AT www.fdch.com
Taiwan Economy Faces Worst Contraction in 26 Years