Singapore  - Singapore's government on Monday raised its growth forecast for 2009 as the city-state's export-dependant economy emerged from its worst recession in history in the third quarter, showing the first year-on-year expansion after three quarters of decline.

The government expected Singapore's gross domestic product (GDP) for 2009 to shrink between 2.0 and 2.5 per cent, well up from the contraction of 4 to 6 per cent predicted earlier, the Ministry of Trade and Industry said in a statement.

According to advance estimates, GDP climbed 0.8 per cent in the third quarter compared to a year ago, driven mainly "by the continued expansion of the biomedical and manufacturing output and improvements in the trade-related and tourism sectors," the ministry said.

In the second quarter, Singapore's economy had dropped 3.2 per cent year-on-year.

"A clear but modest recovery is underway globally, at least for the next three or four quarters," the ministry said, noting that one- off factors like fiscal stimulus measures would continue to support growth in the near term.

"A sustained recovery in private consumption and investment in the developed economies is needed to support growth momentum into the second half of 2010," it said.

However, high unemployment and stagnant incomes would weigh down on private demand, with uncertainties over the pace of withdrawal of stimulus measures posing an additional risk, it added.

"While these factors may dampen growth in the second half of 2010 and result in an uneven recovery, the likelihood of a return of recessionary conditions is low in the absence of further financial shocks," the ministry said.

"Singapore's economic prospects in 2010 will be closely tied to the conditions in the external environment," it said.

According to advance GDP estimates based largely on figures from July and August, the ministry expected Singapore's economy to climb 14.9 per cent in the third quarter compared to the previous quarter, following a 22-per-cent rise posted for the second quarter.

From July to September, manufacturing expanded by nearly 35 per cent quarter-on-quarter on the back of a 58.5-per-cent spike in the previous quarter.

But the construction sector declined by 0.6 per cent in the third quarter following an expansion of 32.7 per cent in the second quarter, "because of slower construction activity for industrial building projects," said the ministry. (dpa)