Asia exports slump fuels recession woe

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Singapore said economic output plummeted nearly 20% in the first three months of the year, its biggest contraction ever, flagging a miserable start to 2009 for other export-dependent Asian nations.

The Singapore government now expects the economy to shrink between 6% and 9% this year, the most since independence in 1965, compared with a previous forecast drop of between 2% and 5%.

Singapore was the first country in Asia to report gross domestic product figures for the first quarter, and the dismal showing suggests that other economies, which are propped up by exports such as Japan, South Korea, Taiwan and Hong Kong may face deeper and longer recessions than feared. China is expected on Thursday to report its worst growth figures for nearly 10 years.

The Asian economy has been hit by a sharp drop in demand for goods such as cars and electricals.

Singapore announced in January a US$14 billion (£9.4 billion) stimulus package and the government may be forced to boost spending again to help bolster the economy.

Tai Hui, head of southeast Asia research for Standard Chartered in Singapore, said: "We believe we are facing a great recession but we are not going into a great depression. We still expect to see some signs of stabilisation at the end of 2009, although admittedly mild."

GDP in the wealthy island city-state plunged 19.7% in the first quarter from the previous quarter and fell 11.5% from a year earlier.

Economists also warned that output in China during the first quarter was probably just 6.3% higher than a year earlier, its slowest rate of growth for nearly a decade.

"Chinese gross domestic product growth will remain below potential until the global economy recovers," said James McCormack, head of Asia sovereign ratings at Fitch Ratings in Hong Kong.