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Singapore. Singapore said on Thursday that it may avoid a recession despite the weak global economic outlook, after data showed the economy contracted less than expected in the last quarter of 2011 despite persistent weakness in electronics.

“The first month of trade numbers, export numbers, are quite good,” said Thia Jang Ping, a director at the Ministry of Trade and Industry. “It’s still too early to call, but our near-term indicators do not suggest an imminent danger of Singapore slipping very badly into a recession in the first quarter.”

The economy shrank 2.5 percent in the fourth quarter from the preceding period on an annualized and seasonally adjusted basis, data showed on Thursday.

The gross domestic product data was better than an advance flash estimate of a 2.9 percent decline, but worse than the median estimate for a 2.3 percent decline by economists polled by Reuters. From a year earlier, gross domestic product grew 3.6 percent.

Singapore stocks and currency weakened on Thursday, although that was in line with the regional trend, with sentiment hit by a another delay in cementing a bailout package for Greece.

Singapore expects its economy to grow by 1-3 percent in 2012, down from last year’s revised growth of 4.9 percent, although it warned of risks to the forecast.

Asia is suffering the effects of slowing demand in the West, and the International Monetary Fund last month warned that Europe’s debt crisis could tip the world economy into recession.

A recession is often defined as two consecutive quarters of contraction, and Singapore, whose trade is three times its GDP, tends to feel the chills from a deterioration in global economic conditions faster than most countries.

“Specifically, a disorderly sovereign default in the euro zone could precipitate a global financial crisis, while an escalation of geopolitical tension in the Middle East could trigger a global oil price shock,” Singapore’s trade ministry said in a statement.

Singapore also said on Thursday that its trade and non-oil domestic exports are expected to grow by 3-5 percent this year, down from a rise of 8 percent and 2.2 percent, respectively, in 2011.

Wu Kun Lung, an economist at Credit Suisse, said electronics manufacturing, which led the decline in Singapore’s fourth quarter GDP, has probably bottomed and could recover later this year.

“The biggest positive we’ve seen so far this year is the pick-up in global PMI [purchasing managers’ index],” he said. “We’ve seen significant improvement in many parts of the world, especially in the US.”

Electronics makes up 31 percent of Singapore’s manufacturing sector, which accounts for about one-quarter of its GDP. The sector contracted a seasonally adjusted and annualized 11.1 percent in October-December.

Singapore officials did not appear overly concerned about the bubbly residential property market, even though private home sales tripled in January from December, when sales fell in response to new cooling measures.

“Essentially there is still some tightness,” said Ow Foong Pheng, the trade ministry’s permanent secretary. “But with the new supply that’s coming in, some of that tightness will ease over the course of the year.”

Unlike in China and Hong Kong where government measures have succeeded in cooling the real estate market, sales of residential property in Singapore have remained strong due to low interest rates and a surge in interest from foreign buyers.

“The government will still keep a watch on the property market,” said Barclays economist Leong Wai Ho.

“One month doesn’t make a trend so in terms of policy formulation, they probably want to wait a few more months.”

 Reuters