Taiwan's 1Q GDP growth slows to 1.54%

Taiwan said Tuesday its economy grew slower than expected in the January-March quarter as exports were hit by sluggish demand in Europe, the United States and China.

The 1.54 percent year on year rise is well down from the 3.72 percent expansion in the previous three months, the Directorate General of Budget, Accounting and Statistics said in a preliminary report. Forecasts had been for 3.26 percent growth.

"The growth momentum was not as strong as we had been expected," an official from the budgeting agency said.

The economy grew just 1.26 percent in 2012, its slowest pace in three years, owing to shrinking exports to key markets.

The trade-reliant economy has been knocked by ongoing weakness in the global economy, with Europe battling a long-running debt crisis, while even China is struggling with a slowdown in growth momentum.

However, DBS economist Ma Tieying told Dow Jones Newswires: "The first-quarter slowdown was not too surprising, considering the disappointment in both China and the US.

"We continue to expect growth reacceleration in the second half after global recovery regains momentum,"

Exports, roughly accounting for about two-thirds of the island's GDP, rose 2.4 percent year-on-year in the first quarter following a 2.5 percent rise in the previous quarter.

Weak demand for products in IT, as well as machinery and petrochemical sectors were to blame for the economy's tepid performance, the agency said.

It was also hurt by a sharp fall in the Japanese yen, which has made Taiwan firms' goods more expensive than their Japanese competitors, it said.

Analysts said the latest figures will mean the government will likely have to revise down its growth forecast for this year from the 3.59 percent projected in February, analysts said.