SINGAPORE, Nov 6: Singapore's fortunes are still bright, despite Asia's currency turmoil, because of expected growth in key sectors and its response to the new Asian market, a senior SocGen Crosby official said on Thursday.

``Singapore is the only bright spot in the region at the moment. It has been oversold by the market,'' head of regional economic research Neil Saker told a news conference on the after effects of the currency crisis.

He said the game had changed in Asia, and those with better managed systems and the ability to confront new challenges, such as Singapore, Hong Kong and Indonesia, would emerge in the lead.

While the region as a whole would have to endure a painful recovery from excess credit growth and oversupply, Saker said Singapore was already well placed for a turnaround.

``The system is responding very well to the region as the government is pushing deregulation,'' Saker said, referring to deputy prime minister Lee Hsien Loong's promises on Tuesday of bold changes to the finance sector.

The government was actively reviewing how to liberalise financial institutions to make them more innovative in order to stay ahead in an increasingly competitive environment, Lee said.

``That's very important for Singapore, to maintain its head start over the other regional centres,'' Saker said.

Growth recovery in electronics, helped by improving global trends in semiconductors sales, would also spur manufacturing, he said.

``Export-oriented businesses will thrive in this new environment and this will be beneficial for Singapore's manufacturing,'' he added.

Electronics are Singapore's manufacturing staple, accounting for nearly 70 per cent of its non-oil exports.

The Singapore dollar should also stage a rebound with the country's strong fundamentals reasserting themselves, Saker said.

Saker said he saw the Singapore dollar trading around 1.54 to the US dollar this year and strengthening next year.

He said Singapore's gross domestic product (GDP) was also likely to remain stable, with full year 1997 growth probably around 7.2 per cent and 1998 about 6.5 per cent.

The government forecasts GDP in 1997 at between six and seven per cent.

Saker was also positive about other Asian economies like Hong Kong, saying he expected its currency peg to the US dollar to hold, although the costs of defending it would affect growth.

But he said the costs were not so great that it would cause a crisis in banks or the economy.

As for Indonesia, Saker echoed the positive views of other economists heartened by an International Monetary Fund (IMF) aid package that could reach US$40 billion and Jakarta's swift closure of insolvent banks.``I'm sure a lot more will close,'' he said.

But what has occurred so far showed the technocrats were in a far stronger position than economic nationalists and those with vested interests and could push economic reforms, he added.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.