Singapore's trade-driven economy, regarded as a bellwether for Asia, contracted by 1.1 percent in the second quarter from the previous three-month period, a government estimate showed Friday.
The unexpected contraction, down from 9.4 percent growth in the preceding quarter, was largely due to an output drop in the biomedical manufacturing industry, the trade ministry said in a statement.
Compared to a year ago gross domestic product (GDP) grew 1.9 percent, still within the government forecast of 1.0-3.0 percent expansion for the whole year.
"The figures will disappoint as most traders were expecting modest expansion," said Justin Harper, market strategist for IG Markets Singapore.
"Up until now the Singapore economy has been pretty resilient weathering the storm coming in from the eurozone by diversifying across a range of sectors including oil and gas, pharmaceuticals and electronics," he said.
"But the headwinds are proving too strong as Asia takes a hit from slowing European trade."
The GDP estimate for the second quarter is computed largely from data in April and May and subject to revision when more information is available.