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Singapore’s non-oil exports fell for a sixth month in October, a sign the city-state’s economy will likely contract for a third consecutive quarter.
Exports in October fell 15 percent to 13.4 billion Singapore dollars ($8.8 billion) from a year earlier as consumer demand from Europe and the U.S. plunged, according to Ministry of Trade and Industry figures released Monday. Exports fell 7.4 percent in October from the previous month.
“The underlying weakening momentum in exports seems to have intensified,” Kit Wei Zheng, an analyst with Citigroup Inc., said in a report. “We maintain our view that the global slowdown will continue to drag the Singapore economy into a recession in the next 6-12 months.”
The drop in exports was led by non-electronic goods, which decreased 16 percent in October on the back of a 39 percent drop in pharmaceuticals. Electronic goods_such as disk drives, chips and telecommunications equipment_fell 15 percent.
Exports fell 5.7 percent in September and 14 percent in August from a year earlier.
Exports to Europe fell 14 percent last month while sales to the U.S. cratered 31 percent.
Singapore’s trade-dependent economy was the first in Asia to slip into recession this year after gross domestic product contracted in the second and third quarters compared with each of the preceding quarters. A recession is usually defined as two straight quarters of contraction in economic activity.
The government last month cut its 2008 economic growth forecast to 3 percent from between 4 percent and 5 percent on expectations of falling consumer demand in the U.S., Europe and Japan.
Citigroup expects the economy to shrink 1.2 percent next year, and Morgan Stanley said last week Singapore GDP will likely contract 2 percent in 2009.
Non-oil exports account for about 70 percent of the country’s gross domestic product.
Singapore, which is already in recession, could experience negative growth next year, the city-state’s premier has warned.
Prime Minister Lee Hsien Loong said the recession will probably last a year but beyond that there could be several years of slow growth.
“Let us prepare for the worst while hoping for the best,” he told a conference of his People’s Action Party on Sunday.
Growth in 2009 could be negative, he said, according to a text of his remarks received on Monday.
To help deal with the downturn and to prepare for the future, the government is bringing forward its budget from February to January, Lee said. The proposed budget will include measures to support growth and jobs, strengthen business competitiveness and stimulate domestic demand, he said.
At the same time, Singapore is in a strong position, Lee said.
Two casino projects under construction are starting to recruit thousands of employees while “many plants” are setting up in Singapore, he said.
“Our finances are in good shape,” he said.
Singapore became the first Asian economy to fall into recession, analysts said last month, 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 percent, citing a slowdown in the global economy and key domestic sectors.
The move came as the ministry released preliminary data showing that real GDP declined by 6.3 percent in the third quarter after contracting 5.7 percent in the previous quarter, the ministry said.
Japan and Hong Kong have followed Singapore into recession.
Singapore is Southeast Asia’s wealthiest economy in terms of gross domestic product 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.