Singapore has confounded its critics and reported positive economic growth for last year, the only Southeast Asian nation to do so and one of just four in East Asia. Government figures yesterday showed a strong first quarter enabled Singapore to report 1.5 per cent gross domestic product growth for the year, despite slipping into a technical recession with negative growth in the final two quarters. SG Securities chief economist Neil Saker said: 'This is a rebuttal to the pessimists on Singapore who had argued, that faced with collapsing neighbours it too would collapse. Singapore has shown quite a lot of resilience and . . . outperformed Hong Kong.' The SAR's economy shrank 5 per cent last year with only India, the mainland and Taiwan reporting growth. Singapore said the economy shrank 0.8 per cent in the fourth quarter after a 0.6 per cent contraction in the third quarter. The full-year growth figure was slightly higher than the government's 1.3 per cent preliminary estimate. The Singapore Government has stuck with its earlier forecast of plus or minus 1 per cent growth for this year. However, some private-sector analysts suggest it is time for a modest upgrade. 'In the next few months we should see quite a positive rebound if US economic momentum holds up,' Merrill Lynch economist Tan Min Lan said. Analysts are widely forecasting a return to growth either in the second or third quarter of the year, barring any new unforeseen international crises. The Ministry of Trade and Industry said: 'In Singapore, our economic prognosis will continue to hinge on external circumstances. Forward-looking indicators have, however, improved.' A government survey of business expectations revealed Singapore-based companies had become less pessimistic in several sectors, including the all-important electronics and chemicals industries. Economic Development Board spokesman Wong Wee Kim said: 'We are expecting the disk-drive industry to turn in . . . 1999.' Other figures released yesterday, showed unemployment rising to 3.2 per cent last year with 28,300 workers retrenched. The figures marked the first year that employment had declined since Singapore's last recession in 1985, but the drop was lower than expected. Ministry of Manpower director Tan Leng Leng said: 'We think unemployment will likely remain high . . . and lag economic recovery.' Inflation for the year was negative 0.3 per cent, but this too was better than expected. Minus 1 per cent to zero inflation is forecast for this year. The balance of payments surplus shrank to S$5 billion (about HK$22.42 billion) from $11.9 billion in 1997, however, the current account surplus rose to $29.5 billion. At year-end, its foreign reserves had risen to $125 billion, sufficient to cover 8.8 months worth of imports. Due to Singapore's better than expected health, Deputy Prime Minister Lee Hsien Loong has warned not to expect any significant new pump-priming measures to be announced in today's budget. Vickers Ballas Securities economist Eddie Lee said: 'I'm not expecting very much. I think they will shift the focus from short-term fire-fighting measures to longer-term incentives to spur knowledge-based industries and build up Singapore as a financial centre.' However, some residents are hoping for some tax relief to help offset a 10 to 15 per cent cut in salary packages that took effect on January 1.