SINGAPORE may slide into a recession as slowing global economic growth undermines demand for the city-state's exports, the finance minister said.
A recession - typically two consecutive quarters of economic contraction - 'cannot be ruled out,' Finance Minister Tharman Shanmugaratnam said through a spokesman in an emailed response to an Associated Press inquiry.
'We had to expect slower growth than previously expected, given the downward adjustments in the US, Europe and even parts of Asia compared to expectations just 3 months ago,' Mr Shanmugaratnam said.
Singapore's economy grew 2.1 per cent in the second quarter compared to the same quarter a year earlier, down from 6.9 percent growth in the first quarter.
Last month it lowered its growth forecast for this year to between 4 per cent and 5 per cent.
Mr Shanmugaratnam said it was too early to revise the forecast again 'given the extreme fluidity of developments in the US currently.'
Earlier on Monday, Singapore's trade minister Lim Hng Kiang also painted a gloomy picture on Singapore's economiy, saying that economic growth may dip below 4 per cent this year, even as global financial markets try to turn the corner.
'The financial difficulties in the US has led to de-leveraging and credit contractions, therefore slowing global growth,' said the Minister, who was speaking to the media on the sidelines of the Latin Asia Business Forum 2008.
'That means more difficult export markets for Singapore companies and for our economy...later this year and going into next year.'
Mr Lim added that he expects economic growth to be 'closer to 4 per cent, maybe even a bit below 4 per cent, depending on how the financial crisis pans out over the next few weeks and months'.
Singapore's non-oil exports, which account for about 70 per cent of gross domestic product, have been hit hard by the recent economic slowdown in developed countries. Non-oil exports, led by electronic goods and pharmaceuticals, tumbled 14 per cent in August from the same month a year earlier and 5.8 per cent in July. -- AP