TAIPEI - TAIWAN'S economy in the first quarter shrank by about 10 per cent from a year earlier, the worst decline on record, sources close to the government said on Thursday as the island suffered from an export slump.

The sources declined to provide specific figures.

A Reuters poll of economists had expected the island's gross domestic product to shrink by an annual 9.2 per cent in the first quarter.

The statistics agency is due to announce the first-quarter figure and revisions to economic data forecasts for the full year at about 0900 GMT.

'The number shows the domestic economy is worse than we had expected, especially private consumption and investments, which have been so sluggish,' said Fang Wen-yen, an analyst at KGI Securities.

In the fourth quarter of 2008, Taiwan's economy contracted by a preliminary 8.36 per cent from a year earlier, which was then a record fall, the statistics agency said in February.

Taiwan's gross domestic product has been logging annual falls since the third quarter of 2008, with the contraction widening in general as the technology-reliant economy's key exports suffered during the worst global downturn in decades.

That resulted in weak domestic consumption and private investment, and caused the island's jobless rate to hit record highs over the past few months.