Singapore economy seen growing 9 % in 2010

The city-state's gross domestic product will likely grow 9 % this year, according to the median forecast of 19 economists in the quarterly survey, the Monetary Authority of Singapore said Wednesday. In the previous survey in March, analysts had expected the economy would grow 6.5 % this year.

Singapore's economy - which relies on trade, finance and tourism - will likely be led this year by a 16.7 % expansion of the manufacturing sector as non-oil exports soar 17.8 %, according to the analysts.

The government boosted its 2010 growth forecast in April to a range of 7 to 9 % from 4.5 to 6.5 % as Singapore emerged from a recession in 2009. The economy expanded 15.5 % in the first quarter from a year earlier as pharmaceutical and electronic production surged.

"The exceptionally good result in the first half was helped by a comparison to a low base," said Irvin Seah, an economist at DBS bank in Singapore. "We'll likely see another double digit growth figure in the second quarter." DBS raised this week its 2010 growth forecast to 10.3 % from 9%.

Growth will likely slow in the second half because of weaker export demand from Asia as regional policymakers tighten monetary policy and wind down stimulus spending programs, Seah said. Analysts said the economy is likely to grow 9.4 % in the second quarter from a year earlier, 6 % in the third, and 5.5 % next year, the central bank said.

The opening earlier this year of Singaporean first two casino-resorts - built by Malaysia's Genting Bhd and Las Vegas Sands Corp. - have helped attract visitors and boost tourist spending.

Analysts expect financial services to grow 9 %, though Seah said he expects growth in that sector to slow in the second half as Europe's debt crisis drags on global economic growth. Construction will rise 10.3 % this year while wholesale and retail trade will expand 13.3 %, according to the survey.

The inflation rate will probably rise to 2.8 % this year, the unemployment rate will be 2 % and the exchange rate will average 1.356 Singapore dollars per U.S. dollar, little changed from the March survey, the analysts expect.