Overseas shipments rose 5.5 percent from a year earlier after gaining 10.4 percent in March, the Ministry of Finance said in Taipei yesterday. That was less than the 7.8 percent median estimate in a Bloomberg News survey of 12 economists.

“Taiwan’s exports will probably pick up in the third quarter after the U.S. economy hits its bottom and starts to recover,” said Renee Yang, an economist at Yuanta Core Pacific Capital Management Co. in Taipei. “Still, full-year export growth won’t be able to match the 2006 level.”

The slower expansion is the latest sign that Asia is vulnerable to a slowdown in the world’s largest economy. Taiwan’s United Microelectronics Corp., the world’s second- largest custom-chip maker, last week reported an 88 percent decline in first-quarter profit as clients cut orders.

The U.S. economy grew an annualized 1.3 percent in the first quarter, the slowest pace in four years. Japan’s shipments to the nation rose at the weakest pace in more than two years in March.

Overseas sales will grow 6.3 percent this year, slowing from a 12.9 percent gain in 2006, Yang predicts.

Last month, imports into Taiwan rose 11.8 percent from a year earlier, compared with an 8.5 percent gain in March and the median forecast of an 8.5 percent increase in the survey of economists.

Exports to Hong Kong and China increased 7.7 percent after climbing 13.8 percent. Goods are shipped through Hong Kong because of restrictions on trade and transportation between Taiwan and mainland China.

Exports to the U.S. fell 6.7 percent after declining 6.1 percent. Those to Japan rose 1 percent, following a 9.7 percent gain.

“Weaker demand from the U.S. really hurts Taiwan,” Fang Wenyen, a Taipei-based economist at KGI Securities Co., said before the announcement. “Chinese demand can’t fully make up for a drop in the U.S. because at least one-third of goods shipped to China are ultimately destined for the U.S.”

Overseas shipments make up about half of the economy and electronics such as semiconductors and flat panels are the island’s top exports. The World Bank and International Monetary Fund last month both predicted Taiwan’s economic expansion will cool in 2007 on easing demand for exports.

The World Bank forecasts Taiwan’s economy will grow 4.1 percent this year after advancing 4.6 percent in 2006.

Taiwan, like Japan and South Korea, is relying on sales to China to make up for slackening demand in the U.S.

Growth in China, the world’s fastest growing major economy, accelerated to 11.1 percent in the first quarter from a year earlier. South Korea said last week that its exports to China surged 26 percent in April from a year ago.

The island’s exports of computer chips and other electronic parts climbed 2.1 percent to US$5.28 billion in April after rising 9.8 percent in March. Overseas sales of information technology and telecommunications products dropped 9 percent to US$761.5 million, after an 18.5 percent decline.

United Microelectronics said on April 30 that net income slumped to NT$1.5 billion in the first quarter because clients including Texas Instruments Inc. cut orders to clear excess inventory.

Shares in the Hsinchu, Taiwan-based chipmaker were downgraded to “hold” from “buy” by Citigroup Inc. on May 3.

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