The city-state's 2004 performance, its best since 9.7 percent in 2000, was led by growth of 13.1 percent in the key manufacturing sector, the ministry of trade and industry (MTI) said Monday, Jan 3.

An increase of 7.5 percent in the services sector also bolstered the figures, making Singapore one of the fastest growing Asian economies in 2004.

Overall, however, last year came in at the lower end of the official forecast of 8-8.5 percent as the economy slowed in the fourth quarter and growth was put at a more moderate 3-5 percent in 2005.

Preliminary data, computed mainly from October and November figures, showed Gross Domestic Product (GDP) is likely to have expanded at an annual rate of 5.4 percent in the December quarter compared with 7.5 percent in the three months to September, the MTI said.

On a quarterly comparison, GDP rose 2.4 percent from the third quarter, when it fell 3 percent, but this was well below analyst forecasts for 3.7 percent.

"The Singapore economy registered a moderation of growth in the fourth quarter of 2004," the MTI said.

Manufacturing grew 9.5 percent in the December quarter, slower than the 11.9 percent recorded in the previous quarter while the services sector expanded 5 percent after 7.2 percent.

The slower growth in the manufacturing sector was due to a slowdown in the electronics segment, the MTI said.

Manufacturing is a key pillar of the local economy, accounting for almost a quarter of the city-state's economic activity.

Analysts said the data showed the economy was losing steam after a strong first-half showing in 2004.

"This (suggests) that the momentum virtually halted in the second half after accelerating at record double-digit rates of expansion in the preceding four quarters," said Suan Teck Kin, an analyst with OCBC Research.

"Going forward, Singapore's economic growth is likely to settle into a more moderate growth path, with several unfavourable issues dominating the scene in 2005, including inventory adjustment in the semiconductor industry, a weaker US dollar and high crude oil prices," Suan said.

Leslie Tang, an economist with UOB Kay Hian brokerage believed, however, that the signs of moderation are a positive for the Singapore economy.

"There is a positive side to this moderating growth trend," Tang said.

"The downturn in the electronics segment in the fourth quarter seems to indicate that manufacturers are cutting back on production to clear inventories at an accelerated pace," he said.

Prime Minister Lee Hsien Loong in his New Year message Friday maintained the government's growth forecast of 3-5 percent for 2005 and warned that any slowdown in the major economies would have an impact on Singapore.

"Our economy rebounded strongly after several difficult years ... when the global economy and electronics industry picked up, we caught the wind and soared," Lee said.

Singapore's S$160 billion (US$98 billion) economy is heavily dependent on foreign trade and electronics is one of its major exports.

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