The Southeast Asian country, Singapore said that its economy shrank in the last quarter of 2011 but the contraction was not as deep as it earlier estimated.

Singapore Ministry of Trade and Industry reported that the country’s GDP (gross domestic product) shrank 2.5% in the fourth quarter of last year from the previous quarter.

The Ministry said that the first month of trade numbers, export numbers are quite good and it is still too early to call, but their near-term indicators does not suggest danger of the country slipping into a recession in the first quarter of this year.

The ministry announced the Singapore manufacturing fell 11% from October to December from the previous quarter while construction is down 2.2%.

In January, the Trade and Industry Ministry had announced preliminary results that the economy contracted 4.9% in the last three months and forecasted the economic growth for 2012 between 1% and 3%.

Economists said that Asian countries are hit hard with the effects of the sluggish demand in the West and also warned that the recent sovereign debt crisis of euro-zone could tip the world economy into recession.

In a statement, the Singapore’s trade ministry said that particularly, a euro-region sovereign default could precipitate a global financial crisis, while the rise of geopolitical tension in the Middle East could trigger a global oil price shock.

An economist Leslie Tang in Singapore at OSK-DMG said that it looks like the situation is improving but you cannot deny that the risks comes from the world’s largest economy the US or from the European countries are still there.

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