Singapore’s economy registered a contraction of 14.6 per cent in the first quarter compared with the previous quarter, the government said Thursday.

That is better than the contraction of 19.7 per cent estimated just a month ago. The slide, however, marks the fourth straight quarter of contraction for the Singapore economy, as the city-state grappled with its worst economic downturn in decades.

Compared with a year ago, real gross domestic product (GDP) contracted by 10.1 per cent in the first three months of this year.

Singapore’s Ministry of Trade and Industry (MTI) said with the exception of construction and financial services, all major sectors of the economy experienced further quarter-on-quarter declines.

The key manufacturing sector contracted by 26.6 per cent from a year ago, worse than the previous quarter’s shrinkage of 21.3 per cent as the global downturn hurt demand for exports such as computer chips and pharmaceuticals.

Services, another pillar of the economy, contracted 10.3 per cent as tourism-related arrivals tumbled, but the decline was less than the 15.0 per cent fall in the previous quarter, the ministry said.

Meanwhile, inflation slowed significantly to 2.1 per cent in the first quarter, down from 5.4 per cent in the fourth quarter of 2008.

MTI said inflation tamed due to the downward correction of global commodity prices from peaks in 2008.

The ministry painted a more optimistic outlook for the year, compared with its assessment last month, saying that apart from the H1N1 flu outbreak there were no new major risks to a global economic rebound.

“The sharp collapse in global trade in late 2008 and early 2009 has tapered off,” it said.

“While trade is still expected to be weak for the rest of 2009, further declines of the magnitude seen earlier this year seem unlikely.”

It noted that in the United States, a key export market, there were early signs that the recession may have hit the bottom, but this was not the case with other major economies like Japan and the European Union.

Domestically, indicators for an economic recovery have been mixed, it added.

“Taking into account these factors, (the trade ministry) is maintaining the economic growth forecast for 2009 at -9.0 to -6.0 per cent,” the ministry said.

For Singapore, MTI noted that the current recession has shown how resilient the country’s labour market and corporate sector have been.

These strengths, the ministry said, will position the economy well to ride out this recession.

Singapore’s non-oil domestic exports (NODX) dropped by 26 per cent in the first quarter of this year.

The fourth quarter of last year saw an 18 per cent contraction.

MTI also gave an update on the Consumer Price Index (CPI).

It slowed significantly to 2.1 per cent in the first quarter, down from 5.4 per cent in the fourth quarter of last year.

The ministry said this is mainly due to a downward correction of global commodity prices from the peaks last year.

For the whole of this year, the government maintains its CPI inflation forecast at minus one per cent to zero per cent.

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