* Economy shrinks by record 10.24 pct y/y
* Government cuts 2009 GDP growth view to -4.25 pct
* Cuts forecast for exports, imports and consumption (Adds detail, quotes)
By Lee Chyen Yee and Jeanny Kao
TAIPEI, May 21 (Reuters) - Taiwan's export-led economy shrank a record 10.24 percent in the first quarter, worse than expected, due to poor exports and dismal private investment, prompting the government to cut its full-year growth forecast.
The government deepened its 2009 forecast for an economic contraction to 4.25 percent from a previous forecast of 2.97 percent, confirming what sources at the national statistics agency had told Reuters earlier on Thursday.
The data comes amid a growing consensus that while the world economic downturn may have found a bottom it is still too early to expect anything resembling a rebound in demand and growth.
Earlier on Thursday, Singapore's trade ministry said it saw signs the country's worst-ever recession was bottoming out after the economy shrank less than expected in the first quarter. [ID:nSP404487]
Taiwan's government cut its full-year 2009 forecasts for exports and imports as well as those for private consumption and private investments.
"It was a bit weaker than we thought. There's been a severe hit to exports, but I suspect its spread is probably to the domestic side of the economy. All that's probably weighing on consumption. Firms are probably not in the mood to expand investment right now," said Rob Subbaraman, an economist at Nomura Securities in Hong Kong.
Economists in a Reuters poll had expected gross domestic product to shrink by 9.2 percent, reflecting the trade-dependent island's exposure to the world economic slump.
GDP has been logging annual falls since the third quarter of last year, with the contraction widening in general as the tech-reliant economy's key exports slumped during the worst global downturn in decades.
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The first-quarter figure compared with a revised 8.61 percent annual decline in the fourth quarter, which was also a record.
Some economists expect the island's economy to keep shrinking until late in the year, when there is more evidence that the global economy was recovering.
Reflecting the plight of Asia's exporters, South Korea's GDP fell 4.3 percent in the first quarter from a year earlier, Hong Kong's dropped 7.8 percent, while Singapore's slumped by 10.1 percent.
Taiwan, together with Japan, Hong Kong and Singapore, are in recession.
For the full year of 2009, Taiwan's economy, totalling about $400 billion, will likely shrink 4.25 percent, the worst showing since records began in 1962, the statistics agency said, versus its previous forecast for a 2.97 percent fall.
Any pickup in the economy will depend on a clear turnaround
in technology demand since the island is a tech powerhouse with
the world's two biggest microchip makers, TSMC <2330.TW>
It also makes about 80 percent of the world's laptop computers and more than 40 percent of its liquid crystal displays or LCDs, used in flat-screen TVs.
An improvement in Chinese and U.S. demand will also help boost Taiwan's exports since these are its two biggest markets.
On Thursday, the statistics agency revised its 2009 exports fall to 21.81 percent from its February forecast of 20 percent.
The weak economy has prompted the central bank to cut interest rates seven times to a record low of 1.25 percent, though it kept rates steady in March partly due to signs that the global economy was bottoming out.
The data came after Taiwan's markets closed.
The Taiwan dollar