Singapore officially in recession

It is Singapore's first recession since 2002

Singapore's economy shrank between July and September, confirming it was the first Asian country in recession in the current financial crisis.

The island's economy shrank 6.8% in the third quarter, according to government data, worse than the first estimate of 6.3% the government made last month.

Recession is generally defined as being two consecutive quarters of negative growth.

Hong Kong and Japan have since gone into recession as well.

The Singapore government now forecasts that its economy will shrink by 1% for the whole of 2009.

"Singapore's economy is expected to face a broad-based slowdown in 2009," said the country's Trade and Industry Ministry.

Compared with the same period last year, the economy shrank 0.6%.

Singapore is heavily reliant on exports and the global slowdown means demand for its produce could decline significantly.

"The slowdown in international and regional trade will significantly impact our wholesale trade and the transport and storage sectors," the Ministry said. It added that "considerable uncertainty" remains as to the depth and duration of the downturn.

Monetary policy

Despite the data, the country's central bank has said it does not have plans to cut interest rates before April 2009.

The central bank had already cut rates in October and the Singaporean dollar had been weakening in the expectation of further cuts.

But some analysts do not expect the Bank to hold out until then and predict that there could be a cut before the next meeting.

"We retain our view for the potential for an inter-meeting loosening," said Emmanuel Ng, currency strategist at OCBC Bank in Singapore.

Despite the Bank's stance, the government has promised 2.3bn Singapore dollars (£1bn; $1.5bn) in order to help small businesses access credit in the economic downturn.

Some 124,000 will be able to take advantage of the money, which will be available from 1 December.

"These measures seek to ensure that local enterprises have sufficient resources to continue to operate, invest trade and internationalise in an adverse economic climate," said the Ministry of Trade and Industry.