Taiwan’s economy grew a higher-than-expected 3.84 per cent on-year in the three months to June, official data showed Thursday,thanks to increased exports and domestic consumption.

The figure is much higher than the 2.79 per cent forecast in May and

is the best since the final three months of 2012, as strong demand for electronics, machinery and metals offset declines in other products, the Directorate General of Budget, Accounting and Statistics said.

The economy grew 3.14 per cent in the first quarter.

Private consumption increased 2.6 per cent on-year in April-June as the jobs market picked up, while retail sales and tourism spending also improved, the agency said.

Growth in Taiwan’s export-reliant economy has been buoyed by a steady economic recovery in developed countries as well as improved domestic consumption.

Full-year growth for 2014 was estimated to be 2.98 per cent, putting Taiwan on course to enjoy its best 12 months since 2011.

“The stable growth in Q2 reinforces our view that Taiwan’s economy will continue to recover in H2 on the back of a sustained recovery in advanced economies and mainland China,” the Australia and New Zealand Banking Group said in a research note.

However, ANZ warned that the island faces the risk of losing its export competitiveness after China and South Korea look to finalise a free-trade agreement by year-end while domestic political uncertainty could also affect business confidence.