But growth is expected to slow to 3.0-5.0 percent in 2005 due to the exceptionally high base this year and moderation in global electronics demand, the Ministry of Trade and Industry (MTI) said.

"The moderation of growth in 2005 is in line with the expected decceleration of the world economy and global electronics industry," Friedrich Wu, director of the MTI's ecomomic division, told a media conference.

"In addition, the very robust expansion of the economy in 2004 will imply slower growth next year partly attributable to the high base effect," he said.

The bullish growth forecast failed to lift the local equity markets with the main Straits Times index dropping 1.11 percent to finish at 1,901.41 points on concerns over soaring oil prices.

Singapore is on track to be one of the fastest-growing economies in Asia this year its revised growth projection. It previously forecast the economy to expand 5.5-7.5 percent this year. Last year growth was a mere 1.1 percent.

MTI said it expected growth in the second half to come in at 6.0-8.0 percent after expanding 10 percent year-on-year in the first.

Wu said the lower end of the revised growth forecasts factored in the "unlikely possibility" of the last two quarters of 2004 remaining in neutral territory.

The factors that pushed the economy to dizzying heights in the first six months of the year, namely strong export orders for electronics and solid global economic conditions, will remain the key growth drivers for the rest of the year and also in 2005, Wu said.

Moreover, the composite leading index, which tracks economic activity six to nine months ahead, increased for the fifth straight quarter in the three months to June.

"This is good news for a trade-dependent economy," Wu said.

"The series of gains in the leading index suggests that the momentum of growth will remain strong well to the end of this year."

This year's rebound comes off a low base in 2003 resulting from the economic impact of the Severe Acute Respiratory Syndrome (SARS), a flu-like epidemic which grounded the travel industry and crippled retail and other sectors.

Manufacturing was again the star performer as the sector accelerated by 20.6 percent in the June quarter from a year ago, eclipsed only by the hotels and restaurants sector which surged 37.6 percent, MTI said.

On a quarterly basis, the sector grew 30.3 percent compared with a rise of 12.3 percent in the first quarter.

Robust export demand for electronics and biomedical products is not expected to ease up in the second half, which bodes well for the manufacturing sector, the backbone of Singapore's 90-billion-dollar economy.

All other sectors of the economy also expanded in the June quarter except for the construction industry, which fell 5.1 percent.

Private economists were however less bullish on full year growth prospects, saying the manufacturing sector was highly vulnerable to a weakening in demand for electronics products especially from the United States.

"I think the numbers are a little bit too aggressive," Joseph Tan, economist at Standard Chartered, said of the revised growth projections.

"Growth will invariably slow down in the second half... oil prices being above 40 dollars pose significant risk to Asian economies," said Tan, who was maintaining his 7.6 percent growth forecast this year.

Leslie Tang, economist at UOB Kay Hian brokerage, was similarly less upbeat.

"At the moment, we are at the peak already for the glboal electronics cycle. I think there should be moderation coming in," Tang said.

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