The government says high oil prices will not slow the economy

It increased its forecast to 5.5-5.7%, compared with the previous 3.5-5.5%.

The government put the rise down to robust export-led manufacturing, rising domestic business confidence and a strengthening global economy.

The $95bn (�53.8bn) economy grew at an 11.2% annualised rate in the first quarter of 2004, beating forecasts.

"It's slightly stronger than expected," said Sanjay Mathur, an economist with UBS, referring to the first-quarter figures.

"It is improving in line with conditions we have seen in global trade."

'Healthy outlook'

Last year the economy was hit by the deadly Sars virus, which hit confidence and output across Asia.

The Trade and Industry ministry said Singapore's continuing economic recovery, after 1.1% growth in 2003, was due to favourable external factors.

"The global economic recovery has continued to strengthen in recent months, supported by a low interest rate environment and expanding international trade and investments," the ministry said.

"The global economic outlook is expected to remain healthy."

The ministry highlighted the US as a continued major driver of Singapore's growth, while also giving assessments of the Japanese and Chinese economies.

Widely-anticipated global interest rate rises, led by the US and record-high world oil prices are also not expected to slow Singapore's buoyant economy, the government said.