Gross domestic product rose an annualised 11 per cent quarter-on-quarter between October and December, exceeding estimates of 7.9 per cent, the Ministry of Trade and Industry said. In the third quarter, the economy expanded 16.1 per cent quarter-on-quarter, the fastest pace since 1997.

For the full year, GDP grew 1.1 per cent year-on-year in 2003, faster than forecasts of 0.80 per cent growth but less than the 2.2 per cent rate in 2002.

Nonetheless, the government was optimistic over the latest GDP figures and increased its forecast for 2004 growth to 3.5-5.5 per cent from 3-5 per cent. It warned, however, that outbreaks of avian flu in Asia could pose a risk and hit tourism-related industries.

The figures came a day after neighbouring Malaysia reported its gross domestic product expanded by 5.2 per cent last year, making it the third fastest growing economy in south-east Asia after Thailand and Vietnam.

Malaysia's growth rate exceeded a government forecast of 4.5 per cent but was in line with market expectations. It was the economy's best performance since 2000. It posted 4.2 per cent growth in 2002.

In October Singapore's industrial production surged 19.3 per cent from a year ago, raising the first hopes that the economy could exceed a growth target of 1 per cent for 2003.

The unexpectedly strong increase reflected a tripling in the production of pharmaceuticals, which Singapore has sought to develop as a high-growth industry, and a 12.7 per cent rise in the output of electronics, its biggest manufacturing industry.

The data underscored the fact that Singapore and the rest of Asia were benefiting from a recovery in the US and Japanese export markets and continued strong demand from China. Industrial production in September rose 6.2 per cent.

The latest figures suggest Singapore's efforts to attract global drugmakers with investment incentives are paying off. Some of the world's leading pharmaceutical companies operate in Singapore, including Pfizer, Merck, GlaxoSmithKline, Wyeth and Schering-Plough.
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