* What: Singapore advance Q2 GDP estimate
* When: Thursday, July 10 at 8.00am
* Q2 GDP may have shrunk on decline in drugs, electronics

SINGAPORE'S economy probably shrank in the second quarter, but activity surrounding the island's first Grand Prix in September will prevent the contraction turning into a recession, a Reuters poll shows.

Singapore hosts its first Formula One race on Sept 28. It will be the first night race in F1, requiring specialist construction on the street circuit and is expected to attract a wave of tourists.

While a slump in drugs and electronics output is expected to have prompted a contraction in the trade-driven economy in the April-to-June period, the motor racing event will provide a tonic for gross domestic product in the July-to-September quarter, analysts said.

That means no recession - usually defined as two consecutive quarters of contraction.

'It is unlikely we will see a negative print in the third quarter because we will have the F1 race,' said Ms Selena Ling, an economist at OCBC.

The economy expanded at a seasonally adjusted and annualised rate of 14.6 per cent in the first quarter, the strongest growth in almost three years.

The median forecast of 10 economists polled by Reuters showed GDP was expected to have shrank 0.95 per cent on an annualised, seasonally adjusted basis in the second quarter.

The advance data, largely reflecting the first two months of the quarter, is due on Thursday at 8.00am.

From a year ago, the economy is expected to have grown 3.1 per cent in the second quarter, slowing down from 6.7 per cent in the previous quarter.

Published data shows output from Singapore's manufacturing sector, which generates about a quarter of the economy's activity, unexpectedly declined in April and May as demand for imports eased in the United States and Europe.

'The weakness in global demand has had a certain impact on the pharmaceutical sector,' said Mr Irvin Seah, an economist at DBS. 'A manufacturing-led slowdown in the second and third quarters is certainly on the cards.'

Mr Seah said the Singapore government may cut its 2008 growth forecast to 3.5-5.5 per cent from 4-6 per cent on the back of a poor second-quarter performance.

Singapore will host the world's first F1 night race in September and is resurfacing roads and putting up floodlights for the event. The race is likely to attract thousands of motor sport fans as the government tries to turn the island - mainly a destination for business travellers - into a tourist hotspot.

The government has not said how much it expects the race to contribute to the economy.

With Singapore so exposed to the winds of global trade, economists do not expect the central bank to further tighten monetary policy at its next meeting in October even though inflation in Singapore is running at a 26-year high.

The central bank had tightened monetary policy in April.

The Singapore economy last shrank in the October-to-December period last year, contracting at an annualised rate of 4.8 per cent, also hit by weak drugs and electronics production.

A recovery in drugs production helped the economy in the first quarter grow at its strongest pace since the second quarter 2005.

Europe and the United States buy nearly a third of Singapore's non-oil exports. -- REUTERS