Imports are slowing down much faster than exports and that is not a good sign, said Andy Tan, general manager of Standard and Poor's/MMS.

As Singapore's imports are meant largely for value-added exports and re-export, the import trend will give us an indication of our export potential over the next few months, it is sort of one of our leading indicators, he said.

Singapore said on Saturday its non-oil domestic exports fell 4.8 per cent in May in nominal terms on a year-on-year basis to Singapore $7.06 billion (US$4.33 billion).

It was the second consecutive month they had dropped after falling 1.7 per cent year on year in April. Non-oil imports also fell in nominal terms by 18.1 per cent year on year in May to S$11.88 Billion. Overall exports for May were down 9.2 per cent to S$8.14 billion, while overall imports fell 20.4 per cent toS$12.97 Billion.

The impact of the import decline will be felt most in the manufacturing sector, Singapores engine of growth, economists said, and confirmed projections for a poor second and third quarter showing for the economy. It looks like we are going for a negative figure for the manufacturing industry again, said Sim Hwee Sun, economist with Skandinaviske Enskilda Banken.

"I don't expect second-quarter figures to be good. If we look at the trade figures and the industrial input figures, there will be negative numbers in both industrial production and domestic export over the second quarter," she added.

Economists have recently downgraded their projections for the once-buoyant Singapore economy, with several predicting a contraction. Even the optimists are predicting the economy will barely grow after expanding 7.8 per cent last year.

The government itself is in the process of revising its estimate of between 2.5 and 4.5 per cent growth.

The good news from the May decline in import figuresisthat manufacturers have been hunkering down, trimming costs and capacity over the year and will not be so badly hit by falling sales, analysts said. If manufacturers are not overbuilding capacity they won't be so badly hurt in the downturn, said Yang Sy Jian, director of economic research with Kay Hian Securities.