SINGAPORE, Oct 12 — Singapore's central bank is expected to ease monetary policy this week to support an economy that may have slipped into a recession in the third quarter for the first time since the global financial crisis.

As in much of the rest of Asia, the city state's trade-dependent economy has been knocked by a slowdown in China as factories have cut output in the face of a collapse in exports, forcing policy makers from South Korea to Taiwan to India to ramp up stimulus to restore momentum.

The Monetary Authority of Singapore (MAS) is expected to follow the easing-club and loosen policy for the second time this year at its semiannual review on Wednesday, according to the majority of 25 analysts polled by Reuters.

With inflation running low and signs the economy may have slipped into a recession, most analysts see little reason for the central bank not to ease policy.

“Given risks of a technical recession... we expect that the MAS will opt for more policy easing,” Vishnu Varathan, senior economist for Mizuho Bank said in a research note.

A median in a separate Reuters poll forecast third-quarter GDP to have shrunk 0.1 per cent from the previous quarter on an annualised and seasonally adjusted basis, after a 4.0 per cent contraction in April-June.

That would meet the definition of a technical recession, the first for Singapore since the depths of the financial crisis in 2008-early 2009 when GDP contracted for four consecutive quarters.

The government will announce its advance estimate of third quarter gross domestic product on the same day as the MAS decision.

The MAS manages monetary policy by letting the Singapore dollar rise or fall against the currencies of its main trading partners within an undisclosed trading band based on its nominal effective exchange rate (NEER).

Of the 25 analysts surveyed by Reuters, 15 expect MAS to loosen policy.

Among those who predict an easing, seven expect the slope to be reduced to zero and four see a lower mid-point. Three others expect a slope reduction and re-centering, while one analyst expects a zero slope and band widening.

According to MAS data, the Singapore dollar NEER averaged 122.71 in the week ended Sept 25, down 0.2 per cent from the end of 2014. A further loosening of policy would support Singapore's exports, which is a key driver of economic growth.

Reducing the slope could mean changing to a neutral stance, and away from the current policy of allowing a “modest and gradual” appreciation of the Singapore dollar NEER policy band.

Some economists, who point to MAS's last review in which it emphasised the risks of a tight labour market driving up inflation, predict no policy easing.

“There is a chance that it will retreat from that view at this meeting, given that the economy is having a poor run,” said Daniel Martin, senior economist at Capital Economics in a note to clients, who expects no monetary easing. — Reuters