Singapore's economy grew by 15.5% compared with the year-ago quarter, according to the revised data released by the Ministry of Trade and Industry. This was faster than the 13.1% growth estimated previously. The economy grew 4% from a year earlier in the fourth quarter.

The city-state economy expanded by 38.6% in the January-March quarter on a seasonally-adjusted annualized basis from the prior quarter, faster than a preliminary reading of 32.1% released in April, the Trade Ministry figures showed.

Output in the manufacturing sector during the first quarter grew 32.9% from a year earlier, stronger than the initial estimate of a 30% rise, while the services sector grew 10.9% year-to-year, greater than the 8.4% increase projected in April.

Growth in the construction sector was revised upward to 13.7% as against 11.3% in preliminary data.

The government maintained its forecast of 7% to 9% GDP growth in 2010. The ministry said that the gains were driven by growth in the manufacturing sector, which expanded 32.9% year-on-year, while the services sector grew 10.9%.

"Developments in recent weeks suggest that downside risks have also intensified. First, there is heightened market anxiety over the possibility of a sovereign debt default in Europe," the ministry said. "If these risks materialise, they could affect the global recovery and negatively impact Singapore."

The trade ministry also warned that excessive asset price inflation in emerging Asia remains a concern and that if investor sentiment were to deteriorate or if more monetary tightening measures are taken by Asian countries, there could be sharp corrections in asset prices.

"The concern over asset price appreciation is therefore one of too much, too fast," said, Ravi Menon, Permanent Secretary in the Trade Ministry.

Menon also said that a default by a European country would have negative consequences for the rest of the world, and it was hard to predict the full extent of the impact at this juncture if that were to happen.

"However, what is certain is that growth in the EU will remain weak due to the debt crisis.... If the debt crisis leads to a sharp depreciation of the euro, euro-zone demand for exports from Asia could be affected," he said.

The EU was the second largest trading partner for Singapore in the first quarter that ended March 31.