Compared with a year earlier, shipments fell 10.5% to 12.4 billion Singapore dollars ($9.1 billion), trade agency International Enterprise Singapore said.
Shipments to Europe and the United States led the decline but exports to most of Singapore's top markets fell, dashing hopes that demand in emerging markets would offset a Western slowdown.
Electronic shipments fell 7.3% compared with April, suggesting weaker global consumer demand, and economists said lackluster exports could depress second-quarter economic growth.
"Singapore is facing a manufacturing recession rather than a full-blown recession," said Chua Hak Bin, chief Asian strategist at Deutsche's private bank in Singapore.
Annual gross domestic product growth is expected to slow to around five percent in the April-June period from 6.7% in the first quarter, he said.
Some economists said the central bank's policy of letting the Singapore dollar rise to rein in inflation was squeezing exports.
The currency has risen 5.1% against the US dollar this year. Inflation in April was at 7.5%, a 26-year high.
HSBC economist Robert Prior-Wandesforde said the authorities might have to consider fiscal and administrative measures to curb inflation.
"The exchange rate, which is the only policy tool that the MAS has at its disposal, is the one that is likely to do the most damage to exports," he said, referring to the central bank, the Monetary Authority of Singapore (MAS).
Shipments to Europe slumped 28% compared with a year earlier, the biggest drop since November, while exports to the United States fell 22%. Europe and the United States buy nearly a third of Singapore's non-oil exports.
WEAK ELECTRONICS, VOLATILE DRUGS
Economists had expected a seasonally adjusted 1.1% rise in exports in May, after a 1.6% gain in April.
Compared with a year before, economists had forecast a rise of 1.9%.
Drug exports plunged 48.5% from a year before. Output from drug factories is volatile because of changing production cycles when manufacturers switch from one drug to another.
However, some economists said the recent weakness in the drug sector -- production slumped 56.5% in April -- was more protracted than would be expected from normal plant shutdowns.
"The industry has never seen anything like this period of weakness in Singapore and it raises important questions about the future," HYPERLINK "javascript:void(0);"HSBC's Prior-Wandesforde said.
The Singapore economy is heavily dependent on trade, and non-oil domestic exports were worth about 70% of the city-state's gross domestic product last year.
Shipments from export-reliant Asia are expected to slow this year because of the effects of the global credit crunch, although evidence of a slowdown has been mixed so far.
South Korea's exports in May were at their highest in nearly four years. Taiwan's were 21% higher than a year before.
Some economists said firm demand from emerging Asian markets such as China had provided support, but Singapore's exports to China fell 1.5% in May from a year earlier, an about-turn from April's 19% rise. ($1=1.366 Singapore Dollar) (Reuters)
