SINGAPORE: Singapore revised upward its economic forecast for 2009 as a spike in biomedical manufacturing output and electronics inventory restocking, led to an improved second quarter performance.

The Trade and Industry Ministry (MTI) said today that it expected Singapore's economy to contract by 4.0 to 6.0 percent in 2009 from the contraction of 6.0 to 9.0 percent that it had forecast last April.

The revised forecast reflected the less severe contraction in the first half of the year although the underlying economic conditions remained weak, the MTI said in a statement.

It said since the last forecast in April and May, there had been a significant upward revision to the first quarter 2009 results.

On a seasonally-adjusted annualized basis, real gross domestic product (GDP) contracted by 12.7 percent compared to the last quarter of 2008, less than the contraction of 14.6 percent estimated in May and the contraction of 19.7 percent in April.

This implied that the economy contracted less severely in the first quarter of 2009 than earlier estimated and on annualized basis, the economy contracted by 9.6 percent, the MTI said.

It said the advance estimates for the second quarter also indicated a moderation in the rate of economic contraction.

Compared to the same period last year, real GDP was expected to contract by 3.7 percent, compared to the 9.6 percent contraction registered in the first quarter of 2009.

On a seasonally-adjusted annualized basis, real GDP rose by 20.4 percent compared to the first quarter, an improvement from the 12.7 percent contraction experienced in the previous quarter, the MTI highlighted.

The ministry said manufacturing was estimated to have contracted by 1.5 percent, compared to a 24.3 percent contraction in the first quarter.

This reflected chiefly a spike in output registered by the volatile biomedical manufacturing cluster, and an improvement in the electronics cluster due to inventory restocking, it said.

The MTI also said the financial services sector also saw a less severe contraction as general market sentiment improved.

However, the hotel and restaurants sector was weighed down by the slump in tourist arrivals.

The MTI said the outlook for the rest of the year remained largely unchanged with a weak recovery susceptible to downside risks. (Bernama)