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By Jan Dahinten
SINGAPORE, Nov 17 (Reuters) - Singapore's exports fell sharply in October, the latest evidence the global economic crisis is eating into consumer demand, with economists forecasting the country will stay in recession in the fourth quarter.
October non-oil exports dropped an unexpected 7.4 percent after seasonal adjustments, the biggest drop in five months, as trade with key export markets the United States and Europe slid and exports of important products from electronics to drugs fell.
"It looks like a poor start to the fourth quarter and a deteriorating outlook," said Selena Ling, an economist at OCBC bank. "There may be a full blown recession even before the January budget. So downside risks continue to climb."
Singapore, which is already in recession, is due to announce final third-quarter GDP data on Friday. Its economy shrank a seasonally adjusted 5.7 percent in the second quarter and an official flash estimate showed a 6.3 percent contraction in the third quarter.
The government has said it will bring forward the budget by one month to January and vowed to ramp up spending. The poor economic performance has led some economists to predict a monetary policy move before the next official meeting in April.
"All in all, not a particularly encouraging release and one which will put additional pressure on the Monetary Authority to make an intra-meeting adjustment to its currency band," said Robert Prior-Wandesforde of HSBC.
Singapore's central bank conducts monetary policy by managing its currency within a secret band against a basket of currencies, instead of setting interest rates. The Singapore dollar was trading at 1.5227/41 at 0616 GMT, compared with 1.5206/21 before the announcement.
The data comes as Japan confirmed it sank into recession in the third quarter and after news last week that the euro zone suffered its first recession. The United States only avoided one earlier this year because of a stimulus plan but most economists say it is probably already in recession.
October's fall in non-oil domestic exports compared with expectations for marginal growth of 0.3 percent, and followed a worse-than-expected revised 0.9 percent drop in September.
Non-oil exports fell 15.3 percent from a year earlier -- the sixth month of decline and the biggest drop since March 2002 -- to S$13.4 billion ($8.8 billion), trade agency International Enterprise Singapore said on Monday.
That compared with a 5.7 percent fall in September, and with a median forecast in a Reuters poll for a drop of 8.5 percent. October exports to the European Union fell 13.7 percent year-on-year while shipments to the U.S. slid 31.2 percent.
Singapore's economy heavily depends on trade, and non-oil domestic exports were worth about 70 percent of the country's gross domestic product last year.
Economists had expected monthly exports to edge up in October as a rebound in drug sales offset persistent weakness in electronic shipments.
But October's electronics shipments fell by 15 percent from a year ago while drugs exports fell unexpectedly, down 38.9 percent in the same period. Petrochemicals dropped 15 percent.
Singapore's non-oil domestic exports, which comprise of goods that have been made in Singapore or undergone further processing, include mobile phones, medical instruments, and active ingredients for some blockbuster drugs. (Additional reporting by Daryl Loo and Saeed Azhar; Editing by Neil Chatterjee)