* Benchmark discount rate left unchanged at 1.125% as expected * Taiwan c.bank raises 2021 growth forecast to 5.08% * Sees impact from COVID-19 outbreak, but exports to help * Governor warns water shortages among uncertainties for island (Adds quotes, details, byline) TAIPEI, June 17 (Reuters) - Taiwan’s central bank revised up the island’s growth outlook for the year on Thursday as strong exports bolstered a trade-reliant economy that has been resilient in the face of a spike of local COVID-19 cases, and kept interest rates steady as expected. Taiwan’s economy has continued to boom despite the uptick in infections, buoyed by strong global demand for its tech products as many people work and study from home during the pandemic. At its quarterly meeting, the central bank kept the benchmark discount rate at a record low of 1.125%, as expected by all 14 economists in a Reuters poll. This is the fifth time in a year-and-a-quarter it has decided to keep rates unchanged. It last cut rates at its March, 2020 quarterly meeting. The central bank also raised its 2021 estimate for gross domestic product (GDP) growth to 5.08% from 4.53% forecast in March. Growth hit 3.11% in 2020, after expanding 2.71% in 2019. GDP expanded by 8.92% in the first quarter of 2021 from a year earlier, the strongest quarterly growth in over a decade. “Even if the current rise in the epidemic will affect consumption, exports and investment are still very strong, so economic growth is very stable,” Governor Yang Chin-long told reporters. Capital Economics said there were good reasons why the central bank was in no rush to raise rates, given concerns about the virus situation and how any rate hikes would put upward pressure on the soaring Taiwan dollar. “Putting all this together, we think interest rates will remain unchanged until at least the end of the year.” The bank said increasing private investment will be boosted by tech investment on the island. Taiwan is a global powerhouse in the production of semiconductors, a shortage of which has hobbled car plants and affected consumer electronics. It expected the economy to grow 2.86% in the second half of the year, lower than the 7.55% growth rate predicted for the first half. Yang also warned of uncertainties over extreme weather and water and electricity shortages, with the island currently emerging from its worst drought in more than half a century. Taiwan’s decision to hold fire on rates comes after the U.S. Federal Reserve officials projected an accelerated timetable for interest rate increases and opened talks on how to end crisis-era bond-buying. Yang would not be drawn on any rate rise, saying Taiwan’s monetary policy structure was appropriate at present but can be reviewed at any time. “We don’t need to provide forward-looking guidance on the timing of interest rate hikes...like European and U.S. central banks.” (Reporting by Jeanny Kao and Yimou Lee; Writing by Ben Blanchard; Editing by Kim Coghill) Our Standards: The Thomson Reuters Trust Principles.