The Directorate General of Budget, Accounting and Statistics, a government body, revised down its GDP growth forecast for 2016 from February’s projection of 1.47% to 1.06%, citing sluggish global recovery. The Taiwanese economy has been contracting since mid-2015 and continues to face strong headwinds this year as prolonged weakness in export demand curbs wage growth and domestic consumption, outweighing government efforts to cushion the slowdown.

The economy contracted by 0.68% year on year in Q1 2016, according to data released by the Directorate. This marked the third consecutive quarter of negative GDP growth, following revised annual declines of 0.89% in Q4 2015 and 0.80% in Q3 2015. The extended recession is rooted in a sharp downturn in exports, which have contracted year on year for 15 straight months since February 2015, surpassing the stretch of negative export growth seen during the 2008-2009 global financial crisis.

Slowing momentum will pressure Tsai Ing-wen’s new government to come up with more stimulus measures to support the economy. Meanwhile, Taiwan’s central bank cut its benchmark discount rate for the third straight quarter, decreasing by 12.5 basis points from 1.625% to 1.5%. A stable inflation outlook gives the central bank more scope to cut rates again. On the pharmaceutical front, the National Health Insurance Administration (NHIA) announced a new round of price cuts for reimbursement prescription drugs, effective from April 1. The prices of 148 drug items increased while those of 7,392 products were cut by an average of 2.1%. The NHIA estimates the move will produce total cost savings of NT$3.81 billion (US$119 million) per year.

The NHIA uses a drug expenditure target system to adjust prices every year. It cut drug reimbursement prices by an average of 3.9% in 2014 and 5.3% in 2015. This year’s smaller price cut was attributed to the successful implementation of a cloud-based prescription records sharing system, NHI PharmaCloud, which allows doctors and pharmacists to check and avoid duplicate prescriptions.

New NHIA Director-General Lee Po-Chang took office on May 20 and is now in charge of allocation of the NT$600 billion (US$18 billion) National Health Insurance budget. Regarding the controversial diagnosis-related group payment system, which is currently suspended due to opposition from doctors in the primary care sector, he said the NHIA would continue to expand the “Tw-DRG” as a long-term goal. In the meantime, he will seek to minimize controversy by striving for a consensus with the medical community.