SINGAPORE, May 21: Singapore revised upwards its 2007 economic growth forecast on Monday, surprising economists, after a strong 6.1 per cent first quarter expansion. Financial services and construction led the gains in GDP during the first three months, the Ministry of Trade and Industry said.

The 6.1 per cent year-on-year growth figure for GDP, the value of all goods and services produced in the country, was slightly ahead of the preliminary 6 per cent estimate.

“Well, it's a nice surprise. We had all expected, I think, a slight downward revision” after a fall in manufacturing output, said Song Seng Wun, regional economist at CIMB-GK brokerage.

“The Singapore economy started on a strong note,” the trade ministry said, raising its 2007 GDP growth forecast to 5-7 per cent from 4.5-6.5 per cent.

On a quarter-on-quarter seasonally adjusted annualised basis, first quarter GDP growth eased slightly to 7.6 per cent compared with 7.9 per cent in the fourth quarter of last year, it said.

“Growth in the first quarter was led by the financial services and construction sectors,” the trade ministry said. “The manufacturing sector, however, continued to experience a moderation in growth.” The 9.7pc first quarter expansion in construction was the strongest in nine years, it said.

Boom times have returned to the city-state's building industry after years of stagnation. A rebound in property prices and the start of two multi-billion-dollar casino developments have also helped boost the sector.

Financial services expanded 13 per cent in the first three months, particularly in the capital and money markets.

Manufacturing grew 4.3 per cent in the first quarter, a drop from 7.7 per cent in the previous quarter, pulled down by a 5 per cent decline in biomedical production and a 0.7 per cent fall in precision engineering.

Electronics grew 2.6pc, recovering from a 4.1pc decline in the fourth quarter last year, while transport engineering -- which includes offshore oil rigs -- expanded 23pc, the ministry said.

Manufacturing accounts for one third of Singapore's GDP which was valued at 210 billion dollars ($140 billion) last year.

Wun said the electronics sector, a key contributor to exports from Southeast Asia's most advanced economy, appears to be “bottoming out”.

“Going forward I think we should start to see manufacturing contribute more significantly to growth in the coming quarter, especially in the second half if the rest of the world continues to stay on an even keel,” the economist said.

The trade ministry said the global environment “is generally healthy” and forward-looking domestic indicators point to continued growth in the next few quarters. —AFP