However, inflation is expected to hover at around 5 per cent in 2011, warned the Monetary Authority of Singapore (MAS) in a separate statement, before easing to 2.5-3.5 per cent in 2012.
As such, the MAS said it will continue with a policy of a modest and gradual appreciation of the S$NEER policy band.
By doing so, the MAS is guiding the Singapore dollar to appreciate at a slower pace, after the currency reached historic highs against the US dollar in July.
The MAS move takes into account estimates for Singapore's economy which saw growth of 5.9 per cent on a year-on-year basis in the third quarter of 2011.
On a quarter-on-quarter basis, the economy grew by 1.3 per cent, a reversal from a contraction of 6.3 per cent in the previous quarter.
MTI said the improved economic performance in the third quarter was mainly due to a pick-up in growth in the biomedical manufacturing cluster.
It also cautioned that growth could be weighed down by the softening global economic conditions for the rest of 2011.
It cited the electronics cluster as one area which is expected to remain weak due to the easing of global electronics demand.
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