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SINGAPORE: The Singapore government on Wednesday upgraded its 2010 economic growth forecast to a blistering 13 to 15 per cent, outstripping estimates of around 10 per cent growth in regional powerhouse China.
This will put Singapore on track to possibly becoming the world's fastest growing economy, surpassing even China.
The upgrade was due mainly to strong performances in the first two quarters.
However, analysts are even more bullish, with some expecting Singapore to grow even faster than the official forecast.
Robust demand for its manufactured exports, particularly biomedical products, resulted in the sharp upgrade from the earlier estimate of 7.0 to 9.0 per cent growth in gross domestic product (GDP).
GDP growth in the first quarter was 16.9 per cent from a year ago, the Ministry of Trade and Industry (MTI) said, while second quarter expansion is estimated at 19.3 per cent.
That has prompted some economists to predict that growth will come in between 14 and 16 per cent by year-end.
David Cohen, director of Asian Economic Forecasting Action Economics, said: "The financial services sector globally has rebounded from the problems last year.
"In the case of the tourist-related services, like Hong Kong, Singapore has enjoyed a big bounce in tourist arrivals during the first 5 months of 2010, and there's an extra boost from the casinos opening."
MTI said growth would moderate in the second half of the year due to a slowdown in the US recovery and sovereign debt problems in Europe.
Jimmy Koh, head of Economic-Treasury Research, United Overseas Bank, said: "Most of us are still expecting a fairly moderate 5 to 6 per cent growth for 2011.
"And the question is over the next six months, will we see demand coming back in a more significant way? I think given the sluggish kind of recovery in the US, Europe going through austerity measures, we will definitely see a more subdued global environment."
On an annualised and seasonally adjusted basis, Singapore economy expanded 26.0 per cent in the April-June period. The manufacturing sector is estimated to have grown by 45.5 per cent year-on-year.
Growth was driven by a surge in the output of the biomedical manufacturing cluster, as well as a strong expansion in the electronics cluster.
Singapore also revised upwards its forecast for total trade growth this year to between 17 and 19 per cent. This compared to the previous forecast for between 14 and 16 per cent growth.
The forecast for non-oil domestic exports (NODX) has also been raised to between 17 and 19 per cent, up from the previous projection of between 15 and 17 per cent.
Trade promotion agency IE Singapore said among the reasons for the upward revisions were better-than-expected second quarter trade performance.
The year-on-year expansion in both Singapore's total trade and NODX was larger than expected for the second quarter of 2010, at 28 per cent each. The corresponding figures for the second quarter of 2009 were declines of 27 per cent and 14 per cent.
IE Singapore said another contributory factor was strong trade growth of Asian economies.
They continued to enjoy buoyant growth in the first half of 2010, with the International Monetary Fund upgrading Asia's 2010 real GDP growth forecast to 7.5 per cent, up from April's forecast of 6.9 per cent.
The agency said global semiconductor demand also grew at a much faster pace than in 2009.
IE Singapore said for the month of June, NODX rose by 29 per cent on year after the 24 per cent growth in the previous month, due to both electronic and non-electronic domestic exports.
Electronic NODX increased by 44 per cent in June on-year due to higher domestic exports of ICs, parts of ICs and PC parts.
The agency said non-electronic NODX grew by 21 per cent. The increase was led by higher domestic exports of pharmaceuticals, petrochemicals and specialised machinery.
NODX to all of the top 10 markets increased in June. The largest contributors to the increase were the European Union, China and Japan.
- CNA/ls/ir/al
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