Instead, the recovery will be 'slow, gradual and fraught with uncertainties', unlike the quicker rebounds that followed previous downturns, said the Monetary Authority of Singapore (MAS) on Wednesday.

The central bank said in its latest Macroeconomic Review, a twice-yearly survey of the economy, that the worst economic contractions probably took place in the last quarter of last year and the first quarter of this year. The economy logged record quarter-on-quarter declines in both quarters, of 16.4 per cent and 19.7 per cent respectively.

But the MAS stopped short of saying that the worst is over or that the recession has bottomed out. Private-sector economists say that although the worst is likely behind us, the economy could continue to contract in the months ahead, although the declines will not be as severe.

The MAS warned on Wednesday that despite recent signs of a slight increase in economic activity around the world, the major economies are still 'mired in an extended period of sub-par growth' and Singapore's growth is likely to remain 'below potential' as long as that lasts.

The new scare over swine flu, which has eerie echoes of the economically painful Sars period, has also added 'a new dimension of risk to the outlook', it said.

Job losses are expected to rise further across most sectors as companies adjust to the new lower levels of demand. The MAS expects that by the end of the year, net unemployment excluding construction will likely surpass that recorded in the 1998 Asian financial crisis and the 2001 global tech bust. Compared to those recessions, the current downturn is the deepest and one of the longest, and stands out in being more broad-based than previous contractions, it said.

It added that while some green shoots have emerged in the form of new manufacturing orders and stock market rallies, these could turn out to be 'false starts'.

The purchasing managers' indexes in Singapore and around the world have indicated that manufacturing will pick up slightly, but this could simply be due to inventory restocking rather than a return of true demand, said the MAS.

Any rises in Singapore's stock market are also more likely to be 'bear rallies' rather than sustained recoveries.

Read the full story in Thursday's edition of The Straits Times.