Singapore yesterday raised its economic growth forecast after the economy expanded at a better-than-expected 7.9 percent last year, one of the fastest rates in Asia.
The expansion in GDP, the value of all goods and services produced in the country, exceeded the 7.7 percent previously estimated by the Ministry of Trade and Industry.
Singapore's growth rate placed it among Asia's best-performing economies, behind China's 10.7 percent expansion and Vietnam's 8.2 percent rise.
The Singapore government had forecast 4 to 6 percent GDP growth this year, but the trade ministry said in its outlook for this year that expansion should be in the 4.5 to 6.5 percent range.
The city-state's expansion last year exceeded the 6.6 percent growth figure recorded in 2005 and was just ahead of economists' forecasts of 7.7 to 7.8 percent for last year.
In the fourth quarter alone, GDP grew 6.6 percent, or more than the officially estimated 5.9 percent, and better than the 7 percent expansion recorded in the three months to September, the ministry said.
On the Singapore Exchange, the Straits Times Index surged 33.13 points or 1.05 percent to 3,182.29 at the midday break following the positive news.
"For 2006 as a whole, all sectors registered growth, led by manufacturing, wholesale and retail trade and financial services," the trade ministry said in its report.
"2007 looks to be another good year. The signs are overall positive, both externally and domestically," said Ng Wai Choong, the trade ministry's deputy secretary for industry.
David Cohen, an economist with research house Action Economics, also upgraded his forecast this year to 5.5 percent from 5 percent.
"Singapore seems poised for continued growth and the government's revision of their official forecast range for 2007 seems reasonable," he said.
Joseph Tan, an economist with Standard Chartered bank, cited a bull run in the local stock exchange, robust housing sales notably in the high-end segment and a vibrant labor market as signs of the economy's strength.
Tan forecasts 5.5 percent growth this year.
Manufacturing, which accounts for a quarter of the trade-dependent economy, grew 12 percent last year, while the resurgent construction sector expanded 2.7 percent, the trade ministry said.
Trade ministry officials and private sector economists said the positive trend should continue this year. They pointed to robust conditions in Singapore's primary markets and the strong domestic economy as the main drivers.
"In the US, fears of the housing market correction spilling over to the wider economy have subsided with a pickup in housing sales," the trade ministry said.
Business prospects for the EU are healthy, while strong growth is expected to continue in China and India, and the outlook for Japan remains favorable, it said.
Oil prices have also fallen from their peaks of more than US$78 a barrel last year to below US$60, while industry forecasts estimate global semiconductor sales to grow 9.2 percent this year, slowing from 10.4 percent in 2006.
Semiconductors are a key Singapore export.
The trade ministry said Singapore's external trade expanded 13 percent last year, while key non-oil domestic exports rose 8.5 percent. Foreign reserves stood at S$211 billion (US$138 billion) at the end of last year.
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