The New Nation - Internet Edition

AFP, Singapore

Singapore's economy has skidded into a recession for the first time since 2001, the government said Friday, warning that it could contract by up to 1 per cent next year as a global slowdown saps export demand.

The city-state's economy shrank 6.8 per cent in the third quarter from the previous quarter, more than the 6.3 per cent contraction estimated last month, the trade and industry ministry said in a statement.'Singapore's economy is expected to face a broad-based slowdown in 2009,' the ministry said. 'Considerable uncertainty remains as to how deep and long this downturn will last.'In the second quarter, gross domestic product declined 5.3 per cent.

Two straight quarters of economic contraction is the traditional definition of a recession.

Compared to a year ago, the economy shrank 0.6 per cent in the third quarter, the ministry said.

The government expects economic activity of between negative 1 per cent and growth of 2 per cent in 2009, and it cut the city-state's 2008 growth forecast to 2.5 per cent from 3 per cent.

The global economic downturn has dried up demand for Singapore's exports and hurt the financial sector. Manufacturing slid 10 per cent in the third quarter from the previous quarter, while construction fell 11 per cent and financial services plunged 22 per cent, the ministry said.