"We are unlikely to slip into negative growth this year," he told parliament in response to questions. The Singapore economy was "fairly well diversified" and it was being supported by healthy economies in the United States and Europe, he added. Hu said, however, that economic growth would continue to moderate in the second quarter of the year because of Asia's economic crisis, which is hitting neighbours, including key trading and investment partners Indonesia and Malaysia, particularly hard.

The Indonesian economy, by far the worst hit, is expected to contract by at least 10 per cent this year. Malaysia said at the weekend its economy contracted 1.8 per cent in the first quarter of this year. Although the Malaysian government on Monday said it was maintaining a forecast of 2.5 per cent growth for the year, economistsin Kuala Lumpur say the country is almost certainly heading for recession.

Hu said he was optimistic Singapore would escape that fate but made clear a turnaround was not imminent.

"Growth in the second quarter is expected to moderate further as the impact from the regional financial turmoil filters through the economy.""Preliminary data show that (non-oil exports) continued to drop six per cent in May," he said, without giving further details.

Hu did not revise the official government forecast that Singapore's gross domestic product (GDP) would grow by between 2.5 per cent and 4.5 per cent this year.

Almost all economists think even the bottom end of that scale is optimistic and the government is expected to revise the forecast later in the year. Two recent polls have averaged Singapore growth predictions at under two per cent.