SINGAPORE (AP) -- Singapore raised its 2010 growth forecast and now expects the city-state's economy to expand as much as 6.5 percent after contracting last year.
Gross domestic product will likely expand between 4.5 percent and 6.5 percent this year, up from a previous forecast of between 3 percent and 5 percent, the Trade and Industry Ministry said Friday.
The economy shrank 2 percent last year, the ministry said.
Singapore -- which relies on trade, finance and tourism to sustain one of the highest standards of living in Asia -- expects to benefit from increased demand for its exports from neighbors as the region leads the global economy out of recession.
"A paradigm shift is under way, led by China, where regional and internal demand in Asia is becoming more powerful," said Robert Subbaraman, an economist with Nomura in Hong Kong. "Many countries are picking up very strongly, and that's important for Singapore."
Subbaraman said Asian economies -- excluding Japan -- will likely grow 8.5 percent this year, led by 10.5 percent growth in China.
Singapore's economy fell an annualized seasonally adjusted 2.8 percent in the fourth quarter, a smaller drop than the ministry's initial estimate last month of a 6.8 percent contraction.
The economy grew 4 percent in the October-to-December period from a year earlier.
The ministry expects Singapore's overall trade to grow 9 percent to 11 percent this year, up from the ministry's previous forecast of 7 percent to 9 percent growth. Non-oil exports should grow by 10 percent to 12 percent, the ministry said.
Inflation is forecast to range between 2 percent and 3 percent this year, the ministry said.
Associated Press Writer Chun Han Wong contributed to this story from Singapore.