Due to the global economic meltdown, Taiwan plunged into recession as the economy contracted a record 8.36% in the three months to December, the government said on Feb. 18.
The figure "marked the biggest slump since 1961" when the government started compiling quarterly figures, the Directorate General of Budget, Accounting and Statistics said.
The island's key electronics and export sectors have been badly hit by falling overseas demand.
"The pace and scale of the global economic downturn beat our forecast. Taiwan's export and manufacturing sectors suffered a huge setback and the private sector's investment shrank at a fast pace," the agency said.
The export sector, the primary engine of Taiwan's economy, tumbled 19.75% while imports fell 22.63%.
Chen Tain-jy, head of the Council for Economic Planning and Development, admitted that "Taiwan's economy was moving into recession" after GDP contracted for two consecutive quarters.
For the full-year 2008, GDP edged up 0.12% while per capita GDP came in at US$17,576.
Looking ahead, the agency predicted the domestic economy would contract 2.97% in 2009 as overseas demand for electronic-related products -- Taiwan's main exports -- is not expected to pick up anytime soon.
The government has said it plans to launch a US$21 billion economic stimulus drive in a bid to create 150,000 new jobs and reduce unemployment to below 4.5% this year.
Copyright Agence France-Presse, 2009