“Export orders are soft. That gives you a glimpse of the global demand,” said Tony Phoo, senior East Asia economist with Standard Chartered Bank in Taipei. “There’s no denying the slowdown in exports.”

A strong domestic stock market and impressive strength in certain export categories should keep the forecasts from falling too far right away, some analysts believe.

But others are less confident. Taiwan’s economy is “likely” to enter recession, said Liang Kuo-yuan, president of Taipei-based think tank Polaris Research Institute.

“I think the reasons for recession are multiple,” Liang said. “I think among the economic reasons, exports are in the negatives, while domestic demand isn’t strong enough. And the Sino-US trade war has caught Taiwan between two superpowers.”

Overall, contraction in Taiwan’s signature technology exports intensified from November to December despite year-end holidays in the West, which usually translate to strong electronics sales. Exports of semiconductors and other electronic parts crashed from minus 5.7 per cent to minus 9.9 per cent. Orders for electronics plummeted from minus 3.5 per cent in November to minus 8 per cent the following month.

“As a leading indicator, the latter [electronics orders] has pointed to further weakness in export shipments in early-2019,” DBS economist Ma Tieying said. The trade spat has not yet had a negative effect on technology, she added, but “growth in the global smartphone sector has been weighed [down] by market saturation and product maturity”.

Smartphone shipments probably fell 1.3 per cent last year compared to 2017 as consumers waited longer than before to replace devices, market analysis firm Counterpoint Research said.

Handing Taiwan exporters another barrier, US tariffs on US$250 billion of Chinese goods has hobbled sectors such as bicycle and automotive parts, and some of the estimated 100,000 Taiwanese investors in China have shifted production back home or into Southeast Asia in response.

Demand from the large mainland China market is weakening amid a widespread economic slowdown there, taking more orders away from Taiwan. Retail sales in China grew 9 per cent year-on-year in 2019, slowing from 10.2 per cent in 2017 to the most sluggish in 15 years, Ma said, with mainland consumers pulling back particularly on automobiles and telecommunications equipment.

Standard Chartered forecasts 2.5 per cent growth this year and more than 2 per cent next year, lower than both the government and the IMF. DBS, meanwhile, forecasts lower growth again, of 1.9 per cent this year and 1.8 per cent in 2020.

Imports of machinery equipment and semiconductors into Taiwan have picked up since the final months of 2018, Phoo added, suggesting local orders in both sectors. The Nikkei Taiwan Manufacturing Purchasing Managers' Index went up to 49 in March from 46.3 in February, an indication of positive sentiment in the manufacturing and service sectors.

Growing confidence in the economy is illustrated by monthly surveys by Taipei-based financial services group Cathay Financial, which show that sentiment grew in February and March. A March score of minus 10.4, though still negative, beat every month over the previous year in terms of how people see the current economic conditions.

Google, Microsoft and other global technology players will add to GDP after growing their presence in Taiwan and training local staff, but that will be a long term benefit.

And while unemployment hit an 18-year low of 3.7 per cent last year, these green shoots do not appear to be universal.

Ruby Liu, a 30-year-old magazine employee in Taipei, is worried about the longer term employment prospects. Jobs are easy to find, she said, and she can afford her monthly rent of NT$10,000 (US$325), but feels less sure about buying her own home.

“It seems hard to achieve that, even by age 40,” Liu said. “Housing is expensive, and I cannot afford it by myself.”