Singapore economic growth slowed to an annual 2.1 per cent in the second quarter, down sharply from the 6.9 per cent expansion in the first three months amid a fall in exports, the Ministry of Trade and Industry (MTI) said on Monday.

For the first half of 2008, real GDP grew by 4.5 per cent, the ministry said. Growth on an annualized, quarter-on-quarter basis fell by 6.0 per cent in the second quarter.

MTI said the full-year growth range was cut from 4.0 to 6.0 per cent to 4.0 to 5.0 per cent, "consistent with the moderation in economic growth seen in the second quarter."

"GDP growth in the second half is likely to be broadly similar to the first half," the ministry said.

It pointed to weakened balance sheets of financial institutions and declines in housing markets causing a drag on domestic demand in the United States and the European Union.

"Weaker demand in the major economies, coupled with the need to contain inflationary pressures, will dampen growth in the fast growing Asian economies," MTI said.

It forecast the key electronics industry will "remain soft" in the second half of 2008, reflecting weak demand for semiconductors.

The short-term outlook for biomedical manufacturing is expected to be weighed down by global trends such a strong competition from generic drugs.

"Wholesale trade, financial services and business services are likely to remain resilient and will provide some support for overall economic growth," the ministry said.

Singapore's trade promotion agency forecast exports to decline this year by between 2 and 4 per cent, from an earlier estimate of 2 to 4 per cent growth.