WASHINGTON, April 27: The US economy weakened dramatically in the first quarter to its worst growth pace in four years, expanding at a pace of just 1.3 per cent, the government announced on Friday.

A housing slump dragged the world's biggest economy down from its annualised 2.5-per cent clip in the prior quarter.

The first snapshot of 2007 growth, which is likely to be revised in coming months, dashed the hopes of most Wall Street analysts who had anticipated growth of at least 1.8 per cent.

Seconds after the report's release, the euro leapt to a record high against the greenback of 1.3682 dollars as fears mounted about America's economic vitality.

Wall Street's major share indexes, which have shot to record peaks in recent days, opened mostly lower after the report, but stabilised in later trading.

“The GDP report shows slowing economic growth, but also that US consumers are still the main drivers of growth in the US economy,” said Drew Matus, an economist at Lehman Brothers.

Analysts said the bulging US trade deficit, which is especially pronounced with China, as well as the housing market downturn have conspired to hobble growth.

US exports fell 1.2 per cent in the January-March quarter while imports rose 2.3 per cent, contributing to the weakest overall growth pace since the first quarter of 2003 when America launched a war to topple former Iraqi leader Saddam Hussein.

Rising demand for imported goods can dent growth, especially if it means that Americans, for example, are buying more foreign-made cars than comparable models made in Detroit.

Housing investment was a major drag on growth, falling for the sixth straight quarter, by 17 per cent compared with a year

earlier.—AFP