* 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 in paras 2-3, 12-14)
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 statistics agency to cut its full-year growth forecast.
But the worst should be over for the tech-reliant island, with analysts and officials expecting the second quarter onwards to show improvement, especially since growing trade ties with China is seen spurring domestic consumption.
"I think we have more or less seen the bottom for Taiwan's GDP, in terms of dollar value, in the first quarter. We will start seeing improvement in the second, third and fourth quarters this year," chief statistician Shih Su-mei told a news conference.
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.
The government cut its 2009 forecast to an economic contraction of 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.
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.
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 economy's key exports slumped during the worst global downturn in decades.
PAIN IN ASIA
The first-quarter figure compared with a revised 8.61 percent annual decline in the fourth quarter, which was also a record then.
On a seasonally adjusted basis, Taiwan's first quarter GDP was down 1.1 from the previous three months, narrowing from a contraction of 6.4 percent in the fourth quarter of last year, said Ma Tie-ying, an economist at DBS in Singapore.
"We should start seeing quarter-on-quarter growth in the second quarter. The government's infrastructure spending will take effect in the second half of this year," Ma said.
"With Taiwan's China-friendly policies, more Chinese tourists have been coming to Taiwan and on their travel spending alone, they will contribute 0.4 to 0.5 percent to GDP," she said.
Some economists expect the island's economy to contract by much less on an annual basis later in the year, when there is more evidence that the global economy is 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.
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, TSMCand UMC .
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 dollarfirmed to T$32.738 to the U.S. dollar, while the stock market was up 0.23 percent. LINKS > COMMENTARY-Taiwan's GDP: what analysts say.....[ID:nTP258138] > FACTBOX-Recent comments by Taiwan officials.....[ID:nTP84566] > FACTBOX-Forecasts of Taiwan's 2009 GDP..........[ID:nTP26584] > TABLE-Details of Taiwan Q1 GDP report..........[ID:nTP251280] (Editing by Toby Chopra)
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