The rating agency expects GDP growth to be 4.3% this year

Fitch Ratings expects Taiwan’s GDP growth rate to be 4.3% this year, down from 5.7% in 2007.

The Agency said this was a result of slowing industrial production and exports. It also said that in recent years the islands economy has become considerably more exposed to economic conditions in China.

"It appears there is no avoiding a slowdown in emerging Asia, and evidence of weakness in the region's largest economies, China and India, are already showing," said James McCormack, head of Asia Sovereigns.

Taiwanese banks are not immune to the ongoing global economic slowdown either, reckoned Jonathan Lee, senior director of Fitch's Financial Institutions team.

Nevertheless, after a multi-year improvement in asset quality, Taiwanese banks are in a better footing to absorb the likely external shocks brought about by the US-led global economic slowdown.