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TAIPEI: Taiwan's economy recorded its deepest contraction in nearly 11 years in the second quarter, as the coronavirus pandemic dampened tourism although global demand for the island's tech exports helped counter the slowdown.

The government is rolling out a stimulus package worth T$1.05 trillion ($35.9 billion) to reduce the impact of strict border closures, which has hit the services sector and tourism.

Gross domestic product (GDP) contracted 0.73pc in the April-June period from a year earlier, preliminary data from the statistics agency showed on Friday, down from the first quarter's 1.59pc expansion.

That marked the worst decline since a contraction of 1.13pc in the third quarter of 2009 when the global financial crisis damaged the trade-reliant economy.

It was much worse than a forecast of 0.55pc growth in a Reuters poll.

The government attributed the worse-than-expected performance on a 99.5pc annual drop in visitors to the island in the second quarter.

Statistics agency official Huang Wei-jie said growth in investment and industrial production in the quarter was offset by a steep drop in tourism, leading to a 5.13pc year on year decline in consumer spending, its sharpest fall on record.

"The real reason for the decline was the border control, which led to the disappearance of foreign tourists spending in Taiwan," Huang said.

Taiwan's still-strong exports of telecommunications products, which jumped 12.5pc, helped offset some of the drag as people worked from home due to social distancing measures to halt the spread of the coronavirus.

Exports and imports fell 2.4pc and 4pc, respectively, in US dollar terms in the second quarter.

Some analysts have turned more bullish on Taiwan's growth outlook, citing stronger-than-expected technology exports and the expected recovery in domestic demand on the government's effective coronavirus response.

While life in Taiwan has been less disrupted than in countries with strict lockdowns, the government has repeatedly warned of uncertainty for the economy.

In May, it downgraded its growth outlook for this year to a five-year low of 1.67pc, from 2.37pc previously.