TAIPEI (Reuters – Taiwan’s economic growth is expected to slow this year than originally forecasted, the statistics bureau said Friday. The reason for its downgrading outlook was global inflation and COVID-19, which dampen consumer demand both at home and overseas.

As the statistics office increased its export growth forecasts for this year with strong global demand for technology products from the island, 5G, electric cars and high-end computing, the revision occurred.

The Gross Domestic Product (GDP), according to the Directorate General of Budget, Accounting and Statistics, is forecast to increase by 3.91% in 2018, down from 4.42% predicted for February.

The pace of this increase will be slower than that recorded in 2021 at 6.45%, which is the highest growth rate for over 10 years since 2010.25%.

Directorate stated that Taiwan’s rise in COVID-19-related infections and inflation caused by the conflict in Ukraine was affecting consumer demand at home as well as abroad. However, semiconductors, Taiwan’s mainstay, remain strong.

The company now expects that exports will rise by 14.62%, compared to 9.69% earlier.

Taiwan’s exports indicate demand for tech companies such as Apple Inc (NASDAQ):, as Taiwan is a large producer of semiconductors. This shortage has impacted firms such as automakers and helped boost Taiwanese corporate profits.

The agency reported that GDP grew by 3.14 percent in the quarter ended January 31, compared to a previous year. This is slightly higher than the preliminary figure of 3.06%.

A second risk is the slowdown occurring in China’s economy. China is Taiwan’s most important trading partner. China strict COVID control measures have resulted in the long-term lockdown of Shanghai as well as movement curbs throughout many other cities like Beijing.

According to the statistics office, Taiwan’s economic growth is at risk due to lockdowns in China as well as their effect on global supply chains bottlenecks.

In April Taiwan saw its export orders fall for the first-time in over two years. This was due to China’s anti-virus policies and wider global disruptions.