SINGAPORE, Nov 17: Singapore cut its growth forecast for this year to 8-8.5 per cent from 8-9 per cent on Wednesday following a sharp slowdown in the third quarter and warned of uncertainties on the economic outlook for 2005.

However, the government maintained next year's forecast at 3-5 per cent, with officials and economists saying the general slowdown was not a cause for major concern following a period of very strong growth.

Gross domestic product (GDP) in the September quarter grew at a slower-than-expected rate of 7.5 per cent from a year ago, according to the trade and industry ministry.

The figure was down from 12.5 per cent in the three months to June and showed an annualised quarter-on-quarter contraction of three per cent, ending four successive quarters of double-digit expansion.

In a separate announcement, the government said non-oil domestic exports, a leading indicator of Singapore's trade-oriented economy, grew 11.9 per cent in October after a gain of 16.9 per cent in September.

Total trade in October, worth 52 billion dollars ($31.5 billion), rose 18.3 per cent from a year ago after a 24.4 per cent increase in September. "The moderation of growth going forward is in line with the expected deceleration of the world economy and the global electronics industry next year," the trade and industry ministry's economics director, Friedrich Wu, said.

"However, the outlook for 2005 remains hazy and uncertain." The ministry said the expected moderation of "robust" growth in the United States would impact Singapore next year, as would slow economies in China and the other major Asian countries.

It warned that high world oil prices were also an "important risk factor". "While the world economy is better able to handle the impact of higher oil prices than in the 1970s, further increases could dampen growth nevertheless," the ministry said.

Leslie Tang, an economist with UOB Kay Hian brokerage, said Wednesday's figures showed the city-state was heading back to sustainable growth numbers after a period of extremely strong expansion.

"I think it's going back to a normal trend," Tang said, adding Singapore's long-term growth projection should be around 3-5 per cent a year. "You cannot be expecting double-digit growth every quarter or there will be overheating."

For the first nine months of the year, the economy grew 9.1 per cent as it came off a low base in 2003 due to the impact of the Severe Acute Respiratory Syndrome (Sars) crisis and rode on the flow-on effects of strong world growth.

The government said Singapore was still on track to have the second fastest growth rate in the Asia Pacific this year after China, even after lowering the forecast to 8-8.5 per cent.

It said the slowdown in the manufacturing sector and ongoing weaknesses in construction were the main reasons behind the third quarter slowdown. The manufacturing sector, which accounts for almost a quarter of GDP, expanded 11.5 per cent in the September quarter, after 20.7 per cent in the three months to June.

On a quarterly basis, the sector contracted 9.4 per cent compared with a 31 per cent expansion in the second quarter, with lower-than-expected output in the traditionally volatile biomedical cluster the main drag on manufacturing. -AFP