Singapore's trade-sensitive economy has declined for a second straight quarter, the government said today, meaning the city-state has entered a recession for the first time in six years.
The Ministry of Trade and Industry also revised downwards Singapore's full-year growth forecast to around three per cent, citing a slowdown in the global economy and key domestic sectors.
In a move to confront the downturn, the Monetary Authority of Singapore -- 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 gross domestic product (GDP) per capita but is heavily dependent on trade.
This makes it sensitive to hiccups in developed economies, particularly key export markets the United States and Europe.
The data mean that Singapore is the first Asian economy to fall into a technical recession, DBS Group Research said.
The impact of a worsening US financial crisis and deepening credit crunch have weakened US consumer sentiment, which will affect demand from Asia and the rest of the world, Singapore's trade ministry said.
On a seasonally adjusted quarter-on-quarter annualised basis, real 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.
