More gradual growth is expected next year, after two quarters of robust expansion, the Monetary Authority of Singapore (MAS) said yesterday.

It maintained a government forecast of a contraction between 2 per cent and 2.5 per cent this year, citing a challenging external environment in the next few quarters.

"Significant uncertainties remain in the transition to private sector-driven growth as governments prepare to exit from their expansionary policies," the MAS said in its Macroeconomic Review.

"Against this backdrop, the Singapore economy is likely to settle on a more gradual expansion path."

Gross domestic product grew at a seasonally-adjusted annualised rate of 14.9 per cent in the third quarter.

The cautious MAS outlook mirrored other countries' concerns that an economic revival could taper off, underscoring the need for growth-supporting policies.

The MAS said in the report that it expected Singapore's manufacturing sector to recover at a moderate pace, while the services sector would account for the bulk of growth next year.

Singapore's electronics manufacturing is expected to benefit from a recovery in the global IT sector, while buoyant pharmaceuticals output may be boosted further by a "wave of expansion" in new biotech plants.

Financial services should see further signs of recovery, with demand for wealth services in particular set to rise