Taipei. Taiwan's central bank said it will be difficult for the trade-reliant island to grow significantly this year due to "downside" risks to global economic growth.

"The downside risks are rising in the global economy," the central bank said in a report Governor Perng Fai-nan will present to parliament on Thursday.

"This is not beneficial to Taiwan's exports. Significant growth in the (local) economy will be difficult, while the inflation outlook is mild," it said.

The report was seen by Reuters on Tuesday (08/03), one day after the Taiwan government reported that exports in February contracted for the 13th consecutive month.

Last month, the government slashed its 2016 economic growth outlook to 1.47 percent from 2.32 percent, while projecting a year-on-year shrinkage for January-March. Exports are expected to contract for the second straight year.

The central bank report also signaled that the island's monetary authorities were not fazed by a February jump in inflation.

Data issued on Tuesday showed the consumer price index rose 2.4 percent in February from a year earlier, triple the January pace and the biggest annual increase in three years.

On March 24, two weeks after Perng's appearance in parliament, the central bank will hold its quarterly meeting.

At the past two meetings, the central bank cut the policy discount rate, and market participants expect another reduction this time.

Twice in the first quarter, the central bank has guided down market rates, seen as a signal for a third interest rate cut.

In the report to parliament, the central bank said it will keep "appropriate" monetary policy to stimulate economic growth, but added that the effect would be better when paired with fiscal expansion and structural reform.

Reuters