Summary Singapore's GDP contracted 4.0 percent quarter-on-quarter in the three months to June.
SINGAPORE (AFP) - Singapore s exports fell sharply in August on weak demand from China and Europe, official data showed Thursday, raising the odds of a technical recession for the trade-reliant economy in the third quarter.
Non-oil domestic exports tumbled 8.4 percent from a year ago, the trade promotion body International Enterprise (IE) Singapore said, steeper than what analysts predicted and reflecting a general slowdown in Asian exports due to softer global demand.
The "poor export performance in August has pushed the economy closer to a technical recession," DBS Bank said in a market commentary.
"This is significantly higher than market expectations of a 3.5 percent decline."
It added that "external headwinds arising from the deceleration in China s growth would be the key reason behind the dire outcome".
Singapore s gross domestic product (GDP) contracted 4.0 percent quarter-on-quarter in the three months to June, prompting the government to cut its official GDP growth forecast this year to 2.0-2.5 percent from 2.0-4.0 percent previously.
A similar contraction in the third quarter ending September means the economy would be in technical recession, defined as two consecutive quarters of quarter-on-quarter fall in GDP. It is milder than a full blown recession.
Bank of America Merrill Lynch said the August numbers "dashed hopes of an export recovery" for Singapore, a small and open economy heavily dependent on external trade.
"The odds are more than even that the Singapore economy slipped into a technical recession... in the third quarter, in our view," it said in a note.
The weak export numbers were were dragged down by falls in exports of electronic products such as integrated circuit parts, computer components and disk drives, as well as non-electronic items such as petrochemicals and pharmaceuticals.
Official data showed that exports to China fell 8.2 percent in August, accelerating from a 1.6 percent decline in July.
Exports to Europe shrank 9.0 percent and shipments to Japan contracted 8.1 percent, but exports to the US rose 8.8 percent.
"The sharper-than-expected (exports) decline in August brought back fears on the global growth slowdown that is tied to the lacklustre growth in China, as well as in Europe -- both of which are Singapore s largest exporting partners," United Overseas Bank said in a note.
Some analysts said the exports decline could lead the Monetary Authority of Singapore, the city-state s central bank, to ease monetary policy during an October meeting.
A weaker Singapore dollar would make the country s exports more price competitive in the global market.
Unlike most major economies, Singapore s monetary policy focuses on managing the currency exchange rate rather than the interest rate.
