Taiwan is starting to become concerned that as its electronics industry suffers, the rest of the economy is going down the loo. The country's annual GDP contract 0.16 percent in the second quarter, and there are fears that Taiwan could slide into a recession if global growth wobbled and demand for electronic products failed to recover.

According to Moody’s Analytics Taiwan’s recovery will falter if the US economy continues to underperform. If the Chinese slowdown worsens, Taiwan will also suffer, the report said. Already Taiwan has been suffering because of fiscal woes across the eurozone which have damaged Taiwanese exports and played havoc on the earnings of major technology firms, including Acer and HTC.

A recession occurs when a nation reports two consecutive quarters of economic downturn. Taiwan’s GDP edged up 0.4 percent year-on-year in the first quarter before contracting in the second quarter, making this quarter critical.

Moody’s does not expect a recession to happen for Taiwan as it projects two percent growth for this year. It is betting on an improvement in the second half driven by product launches next quarter and an upturn in global demand. But a lot is riding on the Windows 8 launch.