Taiwan on Friday slashed its growth forecast for 2015 to lower-than-expected 1.56 percent, saying the economy was losing strength due to weak demand from abroad and stiffer competition from China in the tech sector.

The figure marked a steep fall of 1.72 percentage points from May when the Directorate General of Budget, Accounting and Statistics made the previous estimate.

"Amid slowing global recovery, the inventory levels of electronic products remain high, competition from the Chinese mainland's supplies chains is growing and prices of raw materials like crude oil keep falling," the island's top government budgeting agency said in a statement.

Traditionally an export-driven technology hub, Taiwan has benefited from Apple's new iPhone6, launched last year. A number of leading Taiwanese firms such as Foxconn and TSMC are reportedly among Apple's suppliers.

But China has been pushing to grow its own tech industry with the development of domestic smartphone brands and homegrown hardware, including chips.

While adjusting the first-quarter GDP growth figure up from 3.37 percent to 3.84 percent, the agency also lowered its second-quarter year-on-year growth figure to 0.52 percent, down 0.12 percentage points from its preliminary figures released last month.

"The main reason for this was much lower exports than predicted," it said.

The agency forecast GDP growth in the third quarter to drop further to 0.10 percent year-on-year, before rising to 1.90 percent in the fourth quarter.

It predicted GDP to grow 2.7 percent in 2016.

Taiwan's economy was buoyed last year by a steady recovery in developed countries as well as record-high exports and rising domestic consumption.

But growth then slowed in the three months to December due to lower-than-expected overseas demand for goods and weaker domestic spending.