Gross domestic product plunged an annualized, seasonally adjusted 19.7% in the first three months of 2009 from the previous quarter and fell 11.5% from a year earlier -- the worst economic performance since records began in the mid-1970s.

Singapore's government now expects the economy to shrink between 6% and 9% this year; earlier, it forecast a contraction between 2% and 5%. The Southeast Asian city-state's previous worst economic performance was a 2.4% contraction in 2001 after the global tech bubble collapsed.

In response, the government is considering a stimulus package of 10 billion Singapore dollars (US$6.7 billion) , about half the size of an earlier raft of measures, unveiled in January, to stir the economy, according to a person familiar with the situation.

In a move that was widely anticipated, the Monetary Authority of Singapore -- the central bank -- eased monetary policy slightly on Tuesday by lowering the trading band that pegs the Singapore dollar to a basket of international currencies.

The central bank said there was "no reason for undue weakening" in the currency. Its move was seen as sanctioning rates already trading in the market and an admission that Singapore can't significantly boost external demand for its goods by altering its exchange rate without foreign investors losing confidence in the currency.

The Monetary Authority uses the Singapore dollar exchange rate, rather than interest rates, as its main tool of monetary policy because Singapore's trade flows dwarf the island's small domestic economy.

Singapore is one of the first countries in the region to report first-quarter GDP, and its sharp decline could presage disappointing results for other trade-dependent economies such as Malaysia, Thailand, Hong Kong, South Korea and Japan.

Malaysia, which reported 0.1% year-on-year growth in the fourth quarter of 2008 is likely to see its economy decline by 3.2% in the first three months, said Robert Prior-Wandesforde, an economist with HSBC in Singapore.

Thailand -- where the economy slipped 6.1% on an annualized, seasonally adjusted basis in the fourth quarter compared with the previous three months -- is also likely to remain under pressure due to the collapse in global trade.

Even nations with large domestic markets to offset declines in exports, such as the Philippines, Indonesia and Vietnam, look vulnerable. Vietnam -- the only other Southeast Asian country so far to report for the most recent quarter -- said last month that its economy grew 3.1% year-on-year in the first quarter, its slowest rate of expansion in over a decade.

Singapore is more dependent than other export-oriented economies such as Hong Kong on demand from the US and Europe for its manufactured goods, meaning it has been especially hard hit, says Manu Bhaskaran, a senior research fellow at Singapore's Institute of Policy Studies.

"We chose a particular growth model that made us much more exposed to the global economy," Mr. Bhaskaran said. "We will not recover until the global economy picks up."

Non-oil exports, which accounted for about 60% of Singapore's GDP last year, fell 26% in the first quarter from a year earlier. Manufacturing, which accounts for a quarter of economic output, slumped 29% in the quarter from a year earlier.

Some economists said they saw signs that Singapore's economy may have touched bottom.. Exports rose a seasonally adjusted 11% in March on the previous month.

Compared with a year earlier, March exports were 17% lower, which was less than a record 35% drop in January and 24% decline in February.

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