Singapore has cut its forecast for growth this year by 1.5 percentage points, blaming the slowdown in the United States economy and weakness of the global electronics cycle. The Ministry of Trade and Industry (MTI) said gross domestic product would expand between 3.5 per cent and 5.5 per cent this year, down from an earlier estimate of 5 per cent to 7 per cent. Growth in the first quarter of this year was put at 4.6 per cent year on year, the slowest rate of expansion in two years. Despite the slowdown, the Monetary Authority of Singapore (MAS), in a related announcement, said it was retaining its tightening bias, confounding speculation it had shifted to a neutral stance. The GDP forecast revision brings the country into line with governments around the region which have already moved to pare their estimates because of the deteriorating external environment. The new estimate suggests that annual growth will halve this year from last year's heady 9.9 per cent rate, which was underpinned by soaring export sales. It is also likely to undershoot 1998's 5.4 per cent expansion, suggesting that the economy will expand at its slowest rate since the regional financial crisis. The MTI made it clear that the slowdown would affect both Singapore's manufacturing output and its role as a service centre for trans-Asian operations. 'The US slowdown will have an impact on . . . regional countries, and indirectly dampen our exports to these economies. Our hub services, which are more regionally orientated, will also be affected,' the MTI said. The direct and indirect impact of a weaker US economy was seen shaving 0.4 of a percentage point off Singapore's GDP growth, while the tail-off in electronics demand would clip a further 0.9 percentage point from the overall estimate. 'Given that electronics make up about half our manufacturing output, the sharper-than-expected downturn in global electronics will directly impact our manufacturing growth,' it said. 'It will also feed through to a range of other related industries like precision engineering, air freight and wholesale trade.' The MAS scotched recent talk that it had quietly abandoned its tightening bias, which was fuelled by the sharp fall of the Singapore dollar against its US counterpart. Singapore's central bank, which uses the exchange rate as its principal tool to quell inflationary pressures, manages the domestic unit against a trade-weighted basket of currencies. 'The recent weakness of the Singapore dollar, especially against the US dollar, has prompted speculation that MAS has shifted its policy stance on the exchange rate. This is not so,' it said. 'Although the trade-weighted Singapore dollar has weakened since [February], it has remained within the policy band.' The Singapore dollar, traded yesterday at S$1.8147, off a low of S$1.82. Last week, the currency touched an 11-year low. In a clear warning to the market, the MAS said it 'stands ready to intervene if necessary'. Analysts said they now expected a shift to a neutral bias in July, when the MAS was scheduled to review its stance. The cut comes just two days after the Association of Southeast Asian Nations said growth in the 10-member bloc would be 3 per cent to 5 per cent this year, down from last year's average of 5.3 per cent.