Is Singapore heading to full-blown recession in 2017?

Shipments to the biggest trading partners -- the US, China and the European Union -- on are steady decline.

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Monetary Authority of Singapore (MAS) Reuters

A continued slack in exports and the election of Donald Trump, who champions economic protectionism, as the US president could push Singapore's economy into a recession, economists and analysts have warned.

Singapore's exports declined 12 percent in October, faring worse than expected and adding to the pain of a 5 percent fall in September, figures released by International Enterprise (IE) showed on Thursday.

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The latest exports data raised the risk of a recession, an economist for RBS in Singapore told Reuters on Thursday. "What this number highlights to us is that the cyclical slowdown is also much bigger than what we have been predicting," said Vaninder Singh, adding that the MAS could look at monetary easing earlier than previously thought.

Singapore's economy contracted 4.1 percent in the third quarter, compared with 0.2 percent growth in the previous quarter, data showed last month. However, the central bank held policy steady despite the sharp fall in growth.

Before the weak GDP numbers were released, Singapore's Trade and Industry Minister Lim Hng Kiang conceded the economy was experiencing "some quarters of negative growth" but ruled out the possibility of the country slipping into an outright recession.

"Our base line projection is not an outright recession, but we cannot rule out the possibility that the economy will experience some quarters of negative growth on a quarter on quarter basis," Lim had said.

Earlier this week, OCBC economist Selena Ling said Singapore economy could be in a full-blown recession next year, as a trade slump and market volatility were compounded by the election of Trump as US president. The economist told the Straits Times the trade-dependent economy of the city state could be in a technical recession, which is defined as two consecutive quarters of negative growth, before the year goes out.

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The downturn in Singapore's exports is exasperated by the fact that shipments to the biggest trading partners -- the US, China and the European Union -- on are steady decline. Analysts feel that the election of Trump as US president will further add pain to Singapore exports.

"The Q4 growth could be negative if we see materialisation of Trump's protectionism. That would significantly disrupt Asian supply chain," Weiwen Ng, an economist for ANZ in Singapore, said.