Prime Minister Goh Chok Tong plans to step down on Thursday

The comments by Mr Goh, who hands over power to his deputy on Thursday, provide more evidence that Singapore is recovering from last year's downturn.

Should it hit its target, Singapore would be vying with China for the title of Asia's fastest growing economy.

The main driver of growth has been increasing global demand for computer chips and pharmaceuticals.

"Everything is in good working order," Mr Goh said during his National Day address. "Now is a good time for me to hand over the controls to a new captain and his crew."

Mr Goh is on Thursday due to hand over power to Lee Hsien Loong, elder son of Singapore's long-time leader Lee Kuan Yew.

Growth picks up

Singapore's economy has delivered near double-digit growth in each of the past four quarters as it recovers from the effects of the Sars virus.

The virus badly affected south-east Asia, denting tourism revenues and travel across the region.

A pick up in global growth since then has helped Singapore recover and prompted the government to raise forecasts for this year three times in the past six months.

Even so, some analysts warned that the new growth targets were aggressive and dependent on a continuing improvement in the global economy.