Singapore warns of slow recovery as virus slams Asia's exporters

The slump marked the second consecutive quarter of GDP contraction for the global finance hub - having declined 0.3% year-on-year in the first quarter and 3.1% quarter-on-quarter - meeting the definition for a technical recession.

The data pointed "to a slower and sluggish economic recovery," said Chua Hak Bin, an economist at Maybank.

He said strict border controls, social distancing rules and foreign worker shortages will weigh on the pace of the recovery, even though lockdown measures have been relaxed.

The Monetary Authority of Singapore (MAS) had eased its monetary policy in March, while the government pumped in nearly S$100 billion ($72 billion) worth of stimulus to blunt the impact of the pandemic.

MAS chief economist Ed Robinson said on Tuesday that its monetary policy "stance remains appropriate including and forestalling a broadening or deepening of disinflationary pressures." He added that MAS' key currency gauge, called NEER, had remained near the middle of its policy band since April.

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Singapore is one of the world's most open economies, with exports equating to about 200% of output.

The grim data comes as other large Asian economies, such as Japan, are also set to report steep descents into recession.

Meanwhile, South Korea's exports extended double digit declines in the first week of August.

Economies were starting re-tighten measures after the fresh emergence of outbreaks, said Selena Ling, OCBC Bank's head of treasury research and strategy.

"That is going to dampen, if not potentially kill off, any of the recovery hopes that people were looking forward to," she said.