Singapore’s economy may grow faster next year than economists initially predicted as manufacturing and private consumption rebound, a central bank survey showed.

 

Gross domestic product may expand 5.5% in 2010, after shrinking 2% this year, according to the median forecast in a quarterly survey of economists by the Monetary Authority of Singapore released today. That compares with a September forecast for 4.5% growth next year and the government’s estimate of between 3% and 5%.

 

Singapore, whose economy expanded in the six months through September after a yearlong contraction, is dependent on a revival in overseas sales to sustain its recovery. The government last month said it doesn’t expect a return to recessionary conditions even as the outlook for the second half of 2010 remains uncertain.

 

“The data so far has been pretty encouraging and that’s contributing to the optimism as we go into 2010,” said David Cohen, an economist with Action Economics in Singapore. “We may still get jitters in the financial markets now and then as there remains uncertainty clouding the outlook for Singapore and the global economy.”

 

Economists in the September survey predicted GDP to shrink 3.6% this year. Since then, as the global economy improved, the city-state’s government raised its forecast to a contraction of at least 2%.

 

The US$182 billion ($254 billion) economy will probably grow 4.7% this quarter from a year earlier, the survey of 20 economists showed. GDP rose 0.6% in the three months ended Sept. 30 from a year ago.

 

A rebound in industrial production has helped Singapore emerge from its worst recession since independence in 1965. The government last month raised its 2009 forecast for exports, predicting shipments may drop between 10% and 11%.

 

Manufacturing will probably fall 3.4% this year, and climb 6.3% in 2010, the survey showed. Exports may increase 10.1% next year after sliding 12% in 2009, the economists said.

 

Singapore’s building industry may slow in coming quarters as developers including Las Vegas Sands Corp. and Genting Bhd. complete their projects. Construction will advance 7.1% next year, less than half of the 16.5% pace expected in 2009, the economists estimated.

 

Private consumption may climb 3.8% in 2010, while financial services may increase 6.5%, according to the median estimates.

 

Singapore’s unemployment rate may be 3.4% at the end of 2009, and fall to 3% by end-2010, the survey showed. The jobless rate was 3.4% in the third quarter.

 

Consumer prices will probably rise 0.3% in 2009 and 2.8% next year, according to the survey. The central bank, which uses its currency rather than interest rates to manage price gains, forecasts inflation will be about zero this year and average 2.5% to 3.5% in 2010.

 

The monetary authority in October said it will maintain a no-appreciation stance in its currency policy, refraining from further monetary easing after opting for a de-facto devaluation of the exchange rate in April to counter collapsing exports.

 

The Singapore dollar will probably end this year at $1.382 versus the U.S. currency, compared with a September prediction of $1.44, the survey showed. It may strengthen to $1.35 by the end of 2010, the economists said.

 

The currency traded at $1.3939 as of 11:10 a.m. in Singapore today.