SINGAPORE - Singapore's economy grew 14.2 per cent on an annualised and seasonally adjusted basis in the third quarter 2009, a slight downward revision from preliminary data in October, the government said on Thursday.

Gross domestic product expanded 0.6 per cent in the third quarter of 2009 from a year earlier, confirming the economy returned to growth after three quarters of annual contraction, the final data from the Ministry of Trade and Industry said.

The government maintained its 2009 GDP forecast for a contraction between 2.5 to 2 per cent and forecast 2010 GDP to grow between 3 and 5 per cent.

The government also revised up its 2010 CPI forecast to rise between 2.5 per cent and 3.5 per cent, up from an earlier forecast of 1 to 2 per cent.

COMMENTARY

Leong Wai Ho, an economist at Barclays Capital, said: "3-5 per cent GDP is the growth trend estimate. Because of the low base for 2009 and the momentum from new capacity such as the IRs (casinos), we think this will push 2010 growth towards 6 per cent.

'The inflation forecast is the one to watch for monetary policy. It's partly due to the change in annual valuations in public housing which goes into imputed rents and thus feeds into the CPI but food prices have also been going up around the world."

David Cohen of Action Economics commented: "The Monetary Authority of Singapore might be watching inflation more carefully (with the upward revision to the 2010 outlook) but I think they will still be keeping the exchange rate band steady till April.

'The global economic situation is still uncertain. An awful lot can happen between now and April so I don't think the forex market will get too excited."

MARKET REACTION

The Singapore dollar was quoted at 1.3844/54 per U.S. dollar, compared to levels of 1.3842 just before the policy announcement.

The statement was released before the benchmark FTSE ST Index started trading. It ended Wednesday session 0.7 per cent lower at 2,745.04 points.