* Exports fall for a 7th straight month
* Technology goods fall, China and U.S. demand sluggish
* More falls expected in coming months (Adds analyst's comment)
By Lee Chyen Yee
TAIPEI, April 7 (Reuters) - Taiwan's exports in March fell 35.7 percent from a year earlier, a seventh straight month of drop, due to steep falls in electronic goods to key markets such as the United States and China, data showed on Tuesday.
Taiwan, hit harder by the global economic slump than most of its Asian peers, will probably log more falls in exports in the coming months, though the declines might slow given signs that some parts of the world economy may be recovering, analysts said.
"I think it's hard for exports to continue to fall given all the policy responses we've seen," said Rob Subbaraman, economist at Nomura.
"The credit crunch has eased. I'm not saying we're anywhere near out of the woods, but we're away from the falling-off-the-cliff scenario of Q4."
Taiwan has been suffering from the worst downturn since the Great Depression, with the economy deep in recession, the jobless rate at a record high and pockets of deflationary pressures emerging due to weak domestic consumption.
The government, which has handed out T$83 billion ($2.5 billion) worth shopping vouchers to spur domestic consumption, plans to pour T$500 billions into a number of infrastructure projects over the next four years.
The central bank has also slashed interest rates to a record low.
Taiwan's data came after South Korea, the first major Asian economy to release March trade data, reported a 21.2 percent annual fall in its March exports.
Economists polled by Reuters had expected exports in March to fall 36.1 percent from a year earlier, after sliding 37.2 percent in the first two months of this year.
COULD BOTTOM SOON
Despite the sharp fall, Taiwan officials said the exports picture showed signs of improvement with the dollar value of shipments rising in February and March.
In March, exports totalled $15.6 billion, while imports fell 49.5 percent to $12.2 billion, more than the 44.5 percent decline forecast by analysts as weak private investments and consumption led to less purchases of machinery and commodities.
The import slump yielded a trade surplus of $3.4 billion in March, the biggest since November 2007 and surging from $129 million in January 2008.
Taiwan's exports to China, including Hong Kong, tumbled 37.5 percent in March after a 25.2 percent drop in February.
Taiwan's fall has been steeper than some of its Asian peers as the island's exports are highly dependent on the technology sector and several key markets, especially China and the United States.
Shipments of electronic goods, which make up a third of Taiwan's exports, fell 33.6 percent in March from a year earlier, compared with February's 30.1 percent decline.
Some analysts say Taiwan's close economic ties with its neighbour China, which is showing signs that its economy may have bottomed out, could help the island recover faster than its peers in the region.
There are also some signs that the technology sector is recovering.
Taiwan Semiconductor Manufacturing Co, the world's top contract chip maker, said late last month the outlook for the global semiconductor industry was improving compared to a month ago.
"We anticipate rush orders from China will continue for another one to two months, boosting exports. I estimate exports will reach between $15 billion and $16 billion per month in the second quarter," said Fang Wen-yen, an economist at KGI Securities. (Additional reporting by Jeanny Kao, Ralph Jennings and Kelvin Soh; Editing by Kazunori Takada)