Singapore's economy contracted in the second quarter and the government forecasts exports to fall this year for the first time since 2001, a sign that sagging growth is becoming a bigger worry for Asia than inflation.
The government on Monday forecast non-oil domestic exports would fall 2-4 percent in 2008, against an earlier estimate of 2-4 percent growth, and predicted the economy would grow at a lower end of a weaker 4-5 percent forecast.
In the second quarter, the economy contracted at a annualised rate of 6 percent after seasonal adjustments, its worst performance in five years and in line with market expectations. Year-on-year the economy grew 2.1 percent. Singapore's heavy dependence on trade makes the $160 billion economy a good gauge of how the global slowdown is affecting Asia. Non-oil domestic exports to the United States fell 21 percent in the second quarter, while shipments to European Union dropped by 12 percent.