Citibank yesterday lowered its forecast for Taiwan's year-on-year growth for the second quarter from 4.4 percent to 4.2 percent, after the earthquake in Japan, it said yesterday.

The company however maintained its 4.5 percent growth forecast for Taiwan this year, due to strong consumption in the first quarter.

The bank's chief economist, Cheng Chen-mao, made the remarks during an event yesterday.

According to Cheng, Taiwan's economy is closely linked to that of Japan. Each one-percent drop in Japan's economy will cause Taiwan's to fall by 0.5 percent.

As such, Taiwan's GDP for Q2 is expected to grow 4.2 percent from the same period last year, lower from Citibank's original forecast of 4.4 percent, he said.

However, due to strong consumption in the first quarter, Citibank has raised its Q1 growth forecast from 4.1 percent to 4.6 percent and maintains its prediction of a 4.5 percent growth for the whole 2011, Cheng said.

Citibank also lowered its forecast for Japan's growth this year from 1.7 percent to 1.1 percent, due to the multiple disasters the country has suffered, he said.

As for the United States, its GDP is expected to drop to 2.9 percent, due to rising oil prices, he said.

-The China Post/ Asia News Network