Taiwan's 1Q GDP estimated slipped sharply to 1.5%

Private consumption growth dropped as well.

According to DBS, the advance estimate of 1Q GDP came in at 1.5% YoY, down from 3.7% in the prior quarter and below the consensus of 3.3%.

The QoQ growth dropped sharply to -3.2% QoQ saar from a very strong 7.3% in 4Q12. Exports of goods and services grew only 4.8% YoY (versus 4.0% in 4Q12), against the backdrop that global recovery remained slow and tepid.

Here's more from DBS:

With domestic inflation staying high in 1Q, private consumption growth also decelerated to 0.4% from 1.6%.

The bright spot in 1Q was investment. Gross capital formation rose a strong 10.6% YoY. We reckon that gross fixed capital formation (excluding inventories) has also accelerated on both YoY and QoQ basis compared to the previous quarter.

This was aided by recovering capacity utilization amongst manufacturers, upturn in domestic property market, and rising capital repatriation from offshore Taiwanese firms on the back of the government’s policy incentives.

The strong rise in investment also boosted imports sharply (6.9%, up from 2.2%), which in turn reduced the contribution of net exports to headline GDP growth.

The 1Q slowdown was not too surprising, considering the disappointment in both China and the US. We continue to expect growth reacceleration in 2H after global recovery regains momentum, though recognizing the downside risks to our full-year GDP forecast of 4.2%.

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