Jan. 16 (Bloomberg) -- Singapore's exports grew a faster- than-expected 3.9 percent in December as companies such as Venture Corp. and Chartered Semiconductor Manufacturing Ltd. shipped more components to customers in the U.S. and China.

Growth accelerated from 0.2 percent in November, the government's trade promotion agency said in a report. It was also higher than the median of six economists' forecasts in a Bloomberg News survey for 1.7 percent growth in non-oil exports, seasonally adjusted, in December from the previous month.

``This is a sign of the continued strength of the Singapore recovery,'' said Prasenjit Basu, managing director of Robust Economic Analysis Pte in Singapore. ``Fourth-quarter GDP will almost certainly be revised up.''

Rising exports will help Singapore's $89 billion economy accelerate after growth slowed to 0.8 percent last year because the war in Iraq hurt trade and an outbreak of severe acute respiratory syndrome emptied hotels and shops. The economy rebounded after the island was declared SARS-free in May.

Singapore's economy expanded an annual 7.9 percent in the fourth quarter of last year, the second straight quarter of expansion, after surging an annual 17 percent in the third. Exports and investments are helping Singapore overcome an annual 9.8 percent contraction in the second quarter of 2003 because of SARS, which infected 239 people and killed 33 in the city.

Stocks rose following the announcement, with the benchmark Straits Times Index reaching 1845.9, its highest today. The index rose 6.89, or 0.4 percent, to 1836.87 at the 5:05 p.m. close. The Singapore dollar was little changed, trading at S$1.6989 to its U.S. counterpart.

U.S., China

From a year earlier, exports grew 30.7 percent in December, helping shipments for the full year to rise 15.1 percent. The government said it expects non-oil exports to rise as much as 12 percent this year as electronics shipments rise and the U.S. buys more goods on the back of its economic recovery. Total trade, which includes imports and exports of all types of goods, is forecast to rise as much as 10 percent.

``The last quarter of the year was really good,'' Lee Yi Shyan, chief executive of International Enterprise Singapore, the trade agency, told reporters. ``Many industries are reporting very firm bookings in the first six months of this year.''

Ho Shih Chuan, deputy director of research at the trade agency, said he didn't expect the weaker U.S. dollar to hurt Singapore's exports. Exports are driven more by demand than currency values, he told reporters. Singapore's currency has risen 3.4 percent against the dollar in the last six months.

Reversing Shrinkage

Exports to the U.S. rose 8 percent in December from a year earlier, reversing a 31 percent shrinkage in the previous month. Shipments to China surged 75.5 percent.

``We saw a positive turnaround some time in the fourth calendar quarter,'' said Deb Dutta, director of South Asia/Pacific for Brocade Communications Systems Inc., a maker of data storage gear. ``We've seen some spending happening among telephone companies, banks and the government, which seems pretty positive.''

Electronics, which account for three-fifths of Singapore's total shipments, rose 25.7 percent in December from a year ago after shrinking 6.7 percent in the previous month. Semiconductor shipments, the island's No. 1 export, rose 69.5 percent.

Exports of pharmaceuticals by drugmakers such as Schering- Plough Corp. and Merck & Co., which account for 15 percent of production, rose 47 percent in December from a year earlier, more than double the 22 percent expansion in November.

Expansion

Like Malaysia and Thailand, Singapore's exports are getting a boost from accelerating growth in the U.S. and China. The world's biggest economy expanded at an 8.2 percent annual rate in the third quarter, the fastest in almost two decades. China's growth averaged 8.5 percent in 2003, the fastest in six years.

Companies such as Chartered Semiconductor and Singapore- based Venture are benefiting from the acceleration.

Chartered, Singapore's biggest chipmaker, last month forecast fourth-quarter revenue will rise 65 percent to $178 million and that it will probably use about 69 percent of its manufacturing capacity, compared with 66 percent of capacity earlier forecast. Chartered's shares have risen 60 percent in the past six months, three times as much as the benchmark Straits Times Index, which rose 18 percent in the same period.

Venture, the biggest electronics maker listed on the Singapore Exchange, said in November that third-quarter profit rose 39 percent after it sold more printers and data storage devices.

Hewlett-Packard Invests

Electronics makers like Hewlett-Packard and Seagate Technology Inc. and drugmakers such as Schering-Plough Corp. and Merck are among companies that are increasing investment in the city to meet surging overseas orders.

Hewlett-Packard, the world's No. 2 computer maker, this week said it plans to invest $1 billion in Singapore in the next five years and will make its most sophisticated computers in the island-state.

``We will be building new manufacturing sites and enhance our current investments in Singapore,'' Paul Chan, managing director, Asia Pacific, said in Singapore.

Hewlett-Packard and other manufacturers are expected to invest S$8 billion ($4.7 billion) on the island this year, higher than last year's S$7.5 billion, Singapore's Economic Development Board said this week.

Schering-Plough, which plans to start selling a new cholesterol-lowering drug this year, last month said it spent $260 million on a new plant and research center to increase production.

Last Updated: January 16, 2004 04:23 EST