Gross domestic product shrank 1.5% compared with the previous three months, the Ministry of Trade and Industry said.
However, growth in the April to May quarter was revised from a contraction of 0.7% to slight growth of 0.2%.
Asian countries have seen growth slow as a result of dwindling exports to Europe, the US and China.
Manufacturing slowdown
Manufacturing has slowed in recent months, as weak demand from those key markets has hit export-dependent Singapore.
Many analysts were expecting the government to step in and loosen monetary policy to weaken the Singapore dollar.
A strong dollar makes exports more expensive overseas, cutting into the profits earned by exporters.
However, the Monetary Authority of Singapore (MAS) said it would maintain its policy of allowing a modest and gradual appreciation of the currency.
"I am a bit surprised that MAS chose to maintain, given signs that global growth momentum has lost steam and many other central banks have chosen to ease," said Song Sen Wun, economist at CIMB in Singapore.
"The fact that we averted a technical recession and the worry about the impact of the tight labour market probably kept them from easing."
A technical recession is defined as two consecutive quarters of economic contraction.
The Ministry of Trade and Industry said Singapore was still on track to achieve the target growth of between 1.5% and 2.5% for the year.-British Broadcasting Corporation (October 12, 2012)
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