The Singapore economy posted the strongest growth in three years, expanding by 3.7 percent on-year in the second quarter, thanks to a sharp rebound in manufacturing.
On a quarter-on-quarter seasonally-adjusted basis, the economy expanded by 15.2 percent, according to advance estimates from the Ministry of Trade and Industry (MTI) on Friday.
The manufacturing sector saw positive growth for the first time in the second quarter of 2013, after three straight quarters of contraction.
Led by higher electronics and biomedical output, the manufacturing sector grew 1.1 percent on-year in Q2, reversing the previous quarter's 6.9 percent contraction.
Another encouraging sign came from the services sector which grew 5 percent on-year between April and June, nearly double the 2.7 percent increase previously.
Mr Edward Lee, Standard Chartered Bank's regional head of research (Southeast Asia), said: "It does suggest that external demand seems to have picked up. I would say the electronics sector bottomed, that seems to be a stronger indicator.
"Pharma is always a bit volatile. It's nice that it provided a boost this time. But of course the question is how sustainable is this, how strong it is going into the second half. At this moment, I would say there are still questions."
Meanwhile, some economists said downside risks ahead could include negative reaction to the unwinding of US stimulus and slowing growth in China.
Mr Francis Tan, United Overseas Bank economist, said: "Even though China's growth may be slowing down, it is still up to our expectation.
"What is more important is the second point - domestic issues. On the domestic side, we still see a positive year-on-year growth in industrial rentals, so that may hurt cost of production for manufacturers and also likely the higher labour cost may also hurt the bottom line as well."
Looking ahead, some economists expect the Singapore economy to do better in the second half of the year compared to the first six months of 2013.
For the full year, they say Singapore's GDP is likely to grow at between 2 and 3 percent - at the higher end of the government's forecast.
Economists also say they expect the central bank to maintain its current monetary policy stance during its review in October.