Gross domestic product shrank 1.5% compared with the previous three months, the Ministry¹ of Trade and Industry said.

 

However, growth in the April to May quarter was revised from a contraction² of 0.7% to slight growth of 0.2%.

 

Asian countries have seen growth slow as a result of dwindling³ exports to Europe, the US and China.

 

 

Manufacturing has slowed in recent months, as weak demand from those key markets has hit export-dependent Singapore.

 

Many analysts⁴ were expecting the government to step in and loosen monetary⁵ policy to weaken the Singapore dollar.

 

A strong dollar makes exports more expensive overseas, cutting into the profits earned by exporters.

 

However, the Monetary Authority of Singapore (MAS) said it would maintain its policy of allowing a modest and gradual appreciation⁶ of the currency.

 

"I am a bit surprised that MAS chose to maintain, given signs that global growth momentum⁷ has lost steam and many other central banks have chosen to ease," said Song Sen Wun, economist⁸ at CIMB in Singapore.

 

"The fact that we averted⁹ a technical recession and the worry about the impact of the tight labour market probably kept them from easing."

 

A technical recession is defined as two consecutive¹⁰ quarters of economic contraction.

 

The Ministry of Trade and Industry said Singapore was still on track to achieve the target growth of between 1.5% and 2.5% for the year.

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