Singapore - Singapore's economy grew faster than expected in the second quarter 2009, the government said Tuesday, but warned that any sustained recovery was uncertain without a turnaround in demand in the city-state's major export markets.

From March to June, Singapore's gross domestic product (GDP) soared 20.7 per cent compared to the previous quarter, driven by strong gains in biomedical manufacturing and inventory restocking in the electronics sector, the Ministry of Trade and Industry said in a statement.

The result was slightly higher than an earlier estimate of 20.4 per cent given in July. In the first quarter, Singapore's GDP contracted by 12.2 per cent.

"However, there have been few signs of a decisive turnaround in final demand in Singapore's key export markets," the ministry said.

Without such a turnaround in the United States and Europe, the ministry said, "any economic recovery in the second half of the year will probably be sluggish and modest."

Singapore's GDP shrank 3.5 per cent in the second quarter year-on- year, less than a 3.7-per-cent contraction the government predicted earlier.

In the first half of 2009, GDP fell by 6.5 per cent compared to the same period last year, as the export-reliant city-state struggles to pull out of its worst recession in more than four decades.

The government maintained its forecast that the economy was likely to shrink between 4 and 6 per cent for the whole year.

The improved performance in the second quarter was largely due to a 49.5-per-cent jump in manufacturing output compared to the previous quarter, after a fall by 18.5 per cent in the period from January to March, the ministry said.

Financial services also improved significantly with a rise by 22.8 per cent quarter-on-quarter, compared to a 10.1-per-cent increase in the first quarter.

"It is uncertain if these can be sustained into the second half (of 2009)," said the ministry.

Singapore's unemployment rate stabilized at 3.3 per cent in the second quarter, after it jumped from 2.5 per cent in the last quarter 2008 to 3.3 per cent in the first quarter 2009.

On Saturday, Prime Minister Lee Hsien Loong warned Singaporeans to brace for more job losses later in the year, although the economy did better than the government expected.

"The outlook remains clouded," Lee said. (dpa)