SINGAPORE, Oct 14 ― Singapore’s central bank maintained its pace of currency appreciation, guarding against inflation risks as the economy grew more than economists estimated last quarter on a pick up in manufacturing.

Gross domestic product rose an annualised 1.2 per cent in the three months through September from the previous quarter, the trade ministry said in a statement today. The median estimate in a Bloomberg News survey of 12 economists was 0.8 per cent. The central bank, which uses the island’s dollar to manage price pressures, said it will maintain a modest and gradual appreciation of the currency.

Singapore’s manufacturing output has benefited from a recovery in overseas demand this year, even as the outlook for global growth dims with the International Monetary Fund cutting its forecast for next year. The government is implementing a 10-year plan to reduce companies’ reliance on cheap foreign workers and boost productivity which has caused a labour shortage and pushed up wage costs.

“The key driver is the manufacturing sector,” Michael Wan, a Singapore-based economist at Credit Suisse Group AG, said before the reports. “Growth is picking up, but it’s not as if it’s rebounding very strongly. The central bank would want to continue to keep its tight exchange rate policy in order to contain inflation expectations.”

The Singapore dollar was little changed at S$1.2717 (RM3.2616) against its US counterpart as of 7.50am local time. The currency has weakened about 0.7 per cent this year. ― Bloomberg