TAIPEI, Taiwan (AP) -- Taiwan's government on Monday lowered its economic growth forecast for 2012 to 3.4 percent from 3.8 percent as demand fades for the island's mainstay electronic exports.
Hit by weaker demand from China, Europe and the U.S., Taiwan's export-reliant economy grew only 0.4 percent in the January-March quarter, falling short of the 1.2 percent forecast in February, the government said.
Taiwan's economy is expected to sustain relatively healthy growth throughout the year, with the global economy set to stage a steady, albeit slow recovery, said the Directorate General of Budget, Accounting and Statistics.
In the January-March quarter, Taiwanese exports fell 4 percent to $70 billion, but exports are expected to grow 4.3 percent for the entire year to $320 billion, the agency said.
Taiwan's mainstay electronics industry could slow under keener competition from global brands such as Apple Inc. but a robust recovery in the semiconductor sector and brisk sales of smartphones could partially offset the slowdown, the agency said.
Exports to mainland China and Hong Kong tumbled 9.7 percent during the first quarter, the sharpest plunge of all the island's export markets.
But exports to Southeast Asia countries grew 7.7 percent. Low wages there are attracting more foreign investment and prompting increased imports of raw materials and components.
For the whole of 2012, Taiwan's inflation is expected to reach 1.9 percent, up from the earlier forecast of 1.5, following fuel and utilities rate hikes, the agency said.
The jobless rate will increase slightly to 4.2 percent for the year, it said.
Taiwan's economy grew a robust 10.7 percent in 2010 but growth slowed to 4 percent in 2011.