The ongoing global credit crisis has pushed Asian economic giant Singapore into recession for the first time in nearly six years and the country has slashed its growth forecast to 3 per cent.
On Friday, Singapore's Ministry of Trade and Industry (MTI) said the country's economy is estimated to contract by 0.5 per cent in the third quarter of 2008, compared with the same period a year ago.
"Taking into account the slowdown in the global economy and key domestic sectors, MTI has revised the 2008 GDP growth forecast to around 3 per cent," MTI said in a statement.
According to Financial Times, "On an annualised, seasonally adjusted rate, the economy shrank by 6.3 per cent from the previous quarter, after contracting by 5.7 per cent in April-June period, which meant that Singapore is in a technical recession defined as two consecutive quarters of negative growth."
In August, MTI had revised the GDP forecast to 4-5 per cent with growth expected to be in the lower range. Since then, the MTI said in the statement that, "external economic conditions have deteriorated more than expected and some sectors of the economy have weakened significantly on account of industry specific or domestic factors".
The worsening financial crisis has ravaged world economies in recent weeks and deepened the credit crunch, making it more difficult for businesses to sustain economic activities.
With unemployment on the rise and house prices continuing to fall, US consumer sentiment has weakened further and would affect demand for exports from Asia and the rest of the world, the statement added.
However, the statement said Singapore's inflation forecast of 6-7 per cent for 2008 remains unchanged.