The New Nation - Internet Edition

AFP, Singapore

Singapore on Wednesday raised 2007 growth targets to 7.5-8.0 percent from 7.0-8.0 percent after the economy grew at a faster pace in the third quarter on the back of a strong performance in the financial and construction sectors.

In the three months to September, gross domestic product (GDP) grew an annual 8.9 percent, faster than the 8.7 percent in the previous quarter, the ministry of trade and industry said.

On a seasonally adjusted quarter-on-quarter annualised basis, the economy grew 4.3 percent from 14.5 percent in the June quarter.

While the September quarter was below government estimates of 9.4 percent, the ministry said average growth in the first three quarters of 2007 was 8.1 percent and the momentum was set to continue for the rest of the year.

"Economic growth picked up pace in the third quarter," the ministry said in its review of the three months to September.

Singapore's economy, valued at 210 billion Singapore dollars (146 billion US) in 2006, is highly dependent on external trade which means the city-state is vulnerable to any slip-ups in the world's major markets.

For 2008, the ministry has also raised its growth targets from 4.0-6.0 percent to 4.5-6.5 percent but cautioned external risks such as the troubled US subprime mortgage and high energy costs may slow the economy.

"If the subprime problems worsen and persist, or if oil prices rise further above current levels, there could be a sharper and more protracted slowdown in the US economy," the ministry said.

"This could drag Singapore's GDP growth towards the lower half of the forecast range," it said.

The ministry said the economy was expected to grow at a slower pace in 2008 from this year because of "above-trend growth" in the last four years.

In the third quarter, economic growth was powered by the financial services sector which grew nearly 20 percent, making it the best performing industry during the period.

Growth in the financial services sector was broadbased amid strong domestic banking and offshore lending activties, the ministry said.

The construction sector continued with its strong rebound with 17.7 percent expansion, underpinned by strong building activity in the industrial and commercial segments.