[djchris]

Singapore's economy is set to grow 5.4 percent this year, according to a survey of private sector economists by the Monetary Authority of Singapore (MAS).

The headline figure is around the mid-point of the government's official forecast range of 4.5 to 6.5 percent.

Economists believe economic growth will be boosted by stable external conditions, as well as the fiscal stimulus from the government's Budget released last month.

Singapore's economic growth is expected to moderate this year, after growing at a 7.9 percent clip in 2006.

But the latest survey of 18 private sector economists shows that there is still a bullish outlook for the economy.

The consensus forecast is for growth to come in around 5.4 percent for 2007. This is an upward revision from the 5.2 percent predicted in the last survey in December.

"Growth in 2007 will be rather broad-based with continued expansion in manufacturing supported by exports. Both the electronics continue to grow, and the expansion of the biomedical sector as well as the oil rig activity," says David Cohen, director of Asian Economic Forecasting at Action Economics.

Economists are most optimistic about the financial services, hotels and restaurants, and construction sectors.

In contrast, they are downgrading the performance of wholesale and retail trade.

The survey forecasts that non-oil domestic exports will grow 9.2% this year.

This surpasses the official government forecast of 7 to 9 percent expansion.

The central bank survey says on the whole, economists are optimistic about Singapore's near-term economic prospects.

It's citing factors such as a broadly supportive global backdrop and firm fundamentals underpinning the domestic economy.

The MAS says the measures announced in the recent government Budget also could provide some upside to economic growth.

Budget 2007 included measures such as a cut in corporate tax to 18 percent and a 1.5 percentage rise in employers' contribution to their workers' Central Provident Fund.

Still, according to the survey, there are the familiar downside risks such as geopolitical developments in the region, an avian flu outbreak and a sharp slowdown in the US economy.

"The other threat to the picture would be some sort of financial crisis, whether it be related to the currency markets. There had been concern that with the US's continued trade deficit, there would be a collapse in the US dollar. That could send shocks to the currency markets although it has been able to sustain a fairly slow and steady easing in the US dollar," says Cohen.

Economists expect the Singdollar to appreciate to around the $1.50 mark against the greenback by the end of 2007.

Interest rates are expected to ease, with the three-month interbank rate falling to 3.2 percent by the end of this year. This compared with 3.44 percent at the end of 2006.

For 2008, respondents to the central bank survey forecast growth of around 5.5 percent. - CNA /ls