SINGAPORE'S economy remains on track this year despite slightly weaker than expected growth in the third quarter, as the Government turned its attention to rising prices.

The Ministry of Trade and Industry's advance estimates, based mainly on data from July and August, showed the economy expanding 10.3 per cent from a year ago, which was slightly below economists' consensus for a 10.8 per cent rise.

MTI on Thursday said the 'Singapore economy remains on track to achieve the overall growth forecast of 13 to 15 per cent' for the year.

Separately, the Monetary Authority of Singapore (MAS), in its monetary policy statement, showed it is more concerned with inflation as it chose to allow the local currency to strengthen slightly faster.

This sent the Singdollar to as high as $1.2886 against the greenback in early trading.

A slowdown had been largely expected coming off the record 18 per cent growth in the first half of the year that economists and the Government had warned would not be sustained.

Compared to the second quarter, the numbers looked worse with GDP contracting 19.8 per cent following a 27.3 per cent rise in the second quarter.

Manufacturing shrank 57 per cent, as drug companies shifted to lower value mix of pharmaceutical ingredients and shut down some plants for regular maintenance and demand for electronics slowed.

Construction also suffered a 12 per cent decline from the second quarter as projects like the Integrated Resorts and other industrial buildings were completed.

Services proved to be the most robust, however, turning in a modest 1.6 per cent growth from the previous three months.

'Singapore's underlying growth momentum is slowing and much in line with the normalisation process in Asia,' said DBS economist Irvin Seah, who maintained his full year growth forecast for Singapore at 15 per cent.

'More than ever before, the prospect of the Singapore economy is more closely tied to Asia than anywhere in the world.'

Growth slows, GPD on track