Taipei  - A Taiwan research institute on Friday revised downward its forecast for the island's 2009 economic growth to 0.89 per cent because of the global economic downturn.

The Taiwan Institute for Economic Research lowered its forecast from 4.11 per cent, which it had made in November.

"Taiwan's economy will contract in the first and second quarter but will grow in the third and fourth quarter," institute researcher Chen Miao said.

The main reasons for the contraction are the effects of the global financial crisis and shrinking domestic investment, he said.

Chen said that despite the global slump, Taiwan's exports would grow in 2009 because of expected robust import demand from Asia.

"Fifty per cent of our exports are to China and Hong Kong," he said. "Our reliance on the United States, Europe and Japan is declining. There will be robust demand from China, India and other Asian nations."

In 2009, the Taiwan dollar was expected to depreciate against the US dollar with the exchange rate expected to be 32.09 Taiwan dollars to 1 US dollar, compared with
2008's 31.53 Taiwan dollars, he said.

A lower local currency makes exports cheaper abroad. (dpa)