SINGAPORE, May 21, 2009 (AFP) - Singapore said Thursday its export-driven economy contracted a better-than-expected 10.1 percent year on year in the first quarter but warned it saw no clear signs of a quick recovery.

The trade ministry maintained its forecast for the economy to shrink between 9.0 and 6.0 percent for the whole of 2009 as the city-state grapples with its worst recession since independence 44 years ago.

Despite the steep drop, it was better than the 11.5 percent fall earlier tipped by the government.

In the three months to March gross domestic product (GDP) fell 14.6 percent compared with the previous quarter on a seasonally adjusted basis.

However, this was also smaller than the government estimate of a 19.7 percent drop and better than the 16.4 percent decline recorded in the December quarter, the trade ministry said.

Analysts and the government said GDP may have hit bottom, but recovery may take a while.

Singapore's fortunes remain dependent on the health of the world's major economies, which buy much of its exports, including microchips and pharmaceuticals.

"On balance, there are still no decisive indicators of economic recovery," the trade ministry said.

The economy fell into recession late last year as the global economic downturn accelerated but still managed to grow 1.1 percent over the 12 months.

"The reason we have a forecast range of minus 6 to minus 9 percent (GDP decline) is because we really don't know," Ravi Menon, second permanent secretary at the trade ministry, said at a news briefing.

"What we are a little surer of is that we have probably seen the bottom... But what we do not know is whether we are going to stay at the bottom for a little bit longer or whether we are going to start having a decisive rebound."

Menon said there was no need for another stimulus "at this point in time" after a 20.5 billion-dollar package unveiled by the government in January.

"The situation has not worsened since the last reading," he said, adding that "things are not likely to get worse from this point on."

The key manufacturing sector contracted by 26.6 percent from the previous quarter's shrinkage of 21.3 percent as the global downturn hurt demand for exports.

Services, another pillar of the economy, contracted 10.3 percent quarter-on-quarter as tourism-related arrivals tumbled, but the decline was less than the 15.0 percent fall in the three months, the ministry said.

"Despite the really ugly data, the good news is that first quarter 2009 could mark the very deep bottom of this economic cycle," said economist Song Seng Wun of CIMB-GK.

"Year-on-year GDP contractions should narrow even if we do not see sequential improvements in the next few quarters, as year-ago bases are less challenging."

The trade ministry said the sharp collapse in global trade in late 2008 and early 2009 has tapered off, and while trade is still expected to be weak for the rest of 2009, "further declines of the magnitude seen earlier this year seem unlikely."

David Cohen, director for Asian economic forecasting at Action Economics, said the latest figures are "consistent with the mainstream outlook that maybe the worst is behind us but a lot depends on the global economy."

"I think we recognise that there's still a lot of uncertainty clouding the outlook here. It's the global outlook that's the big cloud," he told AFP.