Singapore government on Thursday raised its economic growth forecast for 2011 by one percentage point to 5 to 7 percent.
The revision came with a stronger-than-expected growth of 8.3 percent in the first quarter, led by the manufacturing sector, the Ministry of Trade and Industry said.
The external environment is also expected to be conducive to Singapore's growth for the rest of the year, it added, though there are downside risks such as Europe's sovereign debt problems, pressure on oil prices, prolonged disruption in industrial activities in Japan and a tight labour market adding to cost pressures.
Going forward, the growth is expected to be supported by the manufacturing sector and the financial services, it said.
Separately, the Monetary Authority of Singapore (MAS) Managing Director Ravi Menon said on Wednesday that the inflation has probably peaked and will average between 3 and 4 percent.
"Allowing the Singapore dollar to strengthen has had a dampening effect on inflation in Singapore, which would otherwise have been much higher," he said.
The Singapore dollar is trading at near record lows against many major currencies and has played a major role in keeping prices in check. One U.S. dollar fetched 1.2375 Singapore dollars on Thursday.
The MAS preemptively tightened its exchange rate policy in April this year, after two rounds of tightening over the past year.