If EIGHT per cent growth in Malaysia brings a strong smell of smoke and starts alarm bells being rung by foreign economists, why does an acceleration to nine per cent in neighbouring Singapore not generate similar warnings of overheating? All is benign silence, or approval, following the release on Monday of unexpectedly robust growth of nine per cent in the third quarter. The quarter-on-quarter performance translates into an annual rate of 17 per cent; acceleration indeed, but analysts are sanguine because the friction burns that have appeared in Malaysia are absent in Singapore. Rather than chafe at the prospect of the economy over-reaching itself, economists in Singapore have translated the latest GDP figures as a sign that earlier indications of an economic slowdown were temporary. The nine per cent year-on-year gain followed 7.3 per cent in the first quarter and an improving 8.3 per cent in the second quarter. 'This is, to some extent, catch-up,' said Bernard Eschweiler, an economist with J P Morgan. 'At the beginning of the year, exports were slow, and that was a mirror image of the United States, where there was a slowdown in consumer demand.' In the third quarter, the connection was there again. Demand for electronics in the US was strong, and it was this sector which drove Singapore on, with output jumping 19 per cent. Whatever the fuel, Singapore is really motoring, but this performance is regarded as sustainable, while Malaysia's similar performance is still expected to require a firm jab on the brakes by the government. The fundamentals tell the story. Malaysia is running a burgeoning current account deficit. This year, brokers Credit Lyonnais predicts, it will be M$20 billion (about HK$61 billion), or 10.2 per cent of gross domestic product, up from 6.6 per cent of GDP last year, and no improvement is expected in 1996. Singapore is running a handsome surplus - up to US$10 billion, according to Mr Eschweiler - and foreign direct investment continues to pour in. That could mean upward pressure on the Singapore dollar, which has been strong in the recent past, so affecting its competitiveness. However, hot money is flowing out of the republic, although Indonesians appear to be trying to reverse that flow. When the Tequila Sunset of Mexico set in, and nervousness hit all emerging markets, Singapore was seen as a safe haven, with an estimated S$10 billion (about HK$54.7 billion) pouring in. Now, despite the recent twitches in Mexico, there has been a recognition that the rest of Asia is sound, so Singapore has been losing some of that capital. The strong dollar has also helped to avoid another of Malaysia's problems: inflation. Credit Lyonnais is forecasting that the rise in consumer prices this year will be 3.6 per cent, down slightly from 1994's 3.6 per cent, but heading towards 4.5 per cent next year and four per cent in 1997. With prices rising at only 1.4 per cent, Singapore effectively does not have inflation. It does, however, have a labour shortage. And if there is a concern in the republic, it is that this is where the bottlenecks and upward pressure on costs could appear. Malaysia's labour shortage has already translated into job-hopping and wage pressures which have led to inflation. So far, however, Singapore has managed to keep the costs of the workforce in check. In the third quarter, unit labour costs reversed an upward trend seen in the previous four quarters, reflecting a 3.7 per cent improvement in productivity. Despite the latest statistical salute to its success, there will be no sense of superiority in Singapore over the fevered Malaysian economy. Exports to this larger neighbour are declining, partly as a result of a switch in manufacturing patterns in Malaysia but, if the economy has to be slowed down, Singapore could feel a bit of a jolt. The evidence is that it has lots of road in hand.