Singapore has become the first Asian economy to fall into recession, analysts said yesterday, after the government revised downward its full-year growth estimate and eased monetary policy for the first time in years.
The Ministry of Trade and Industry lowered the city-state's full-year growth forecast to around three per cent, citing a slowdown in the global economy and key domestic sectors.
The move came as the ministry released preliminary data showing that real gross domestic product (GDP) declined by 6.3 per cent in the third quarter after contracting 5.7 per cent in the previous quarter, the ministry said.
While it did not describe the economy as being in recession, a technical recession is generally defined as two consecutive quarters of contraction in economic output.
"Singapore will be the first Asia economy to fall into a technical recession," DBS Group Research said in an assessment of the data.
In a move to confront the downturn, the Monetary Authority of Singapore (MAS) - its de facto central bank - said it was easing monetary policy for the first time in more than four years.
Singapore is Southeast Asia's wealthiest economy in terms of GDP per capita but is heavily dependent on trade. This makes it sensitive to hiccups in developed economies, particularly key export markets the US and Europe.
Economists polled by Dow Jones Newswires had forecast a 0.3 per cent quarter-on-quarter rise in GDP, the value of goods and services produced in the economy.
Compared with the third quarter of last year, the ministry said Singapore's economy contracted by 0.5 per cent in real terms, against 0.8 per cent expansion foreseen in the Dow Jones poll.
In August the government had revised down its full-year GDP growth forecast to 4-5 per cent but since then, external economic conditions have deteriorated more than expected, the trade ministry said. - AFP
No comments