Prime Minister Goh Chok Tong is cautiously optimistic

Gross domestic product in the territory was up 15% - at an annualised rate - in the three months to the end of September, the first time it has hit such a pace since the pan-Asian financial crisis of 1997-98.

But economists said the rebound would have been stronger, if not for the effect of the deadly Sars virus, which hit confidence and output across Asia.

And some warned that the continuing recovery looked fragile, depending largely on Singapore's ability to run a skilful monetary policy.

Keep it up

Singapore's Government insists that the recovery is sustainable, and would last through until at least the end of the year.

But market reaction was muted, with many analysts doubting that the territory had truly turned the corner.

"The outlook is maybe a little bit more downbeat than had been rumoured," said Simon Flint of Bank of America.

Some forecasts had tipped growth as high as 20%, based on evidence that Singaporean exporters - especially in the hi-tech sector - are recovering sharply from the global market slump of the past two years.

Ups and downs

Much now depends on government policy, especially the value of the Singapore dollar.

The Monetary Authority of Singapore allowed the dollar to fall slightly - within its prescribed exchange-rate limits - in July, and aims to keep the currency low in order to help exporters.

Overall, the 15% growth does not translate into sizzling year-on-year figures: even government projections still tip GDP to rise by only 1% in 2003 as a whole.

But any full-year growth will be welcome news after a poor performance earlier in 2003.