Washington, Aug 28 (IANS): Singapore's economy would expand by 2.9 percent this year before firming up to 3.4 percent in 2013, and Singapore has ample policy space to mitigate the effects of a steeper global growth slowdown or financial turmoil, the International Monetary Fund (IMF) said.

"Singapore's growth performance over the past year has been driven by global and regional events," the IMF said Monday in a report.

A poor second half of 2011, reflecting deteriorating global activity as well as regional supply disruptions from natural disasters, was followed by a strong bounce-back in the first quarter of 2012, as the easing of supply disruptions boosted manufacturing exports, reported Xinhua citing the report.

Singapore's gross domestic product (GDP) growth was expected to weaken in 2012, even as inflation pressure remained high. The strong global growth impulse seen earlier this year has given way to tepid world demand, the global lender said in its annual economic and financial checkup of the Asian economy.

Global financial turbulence has over the past year continued to cause volatility in Singapore's equity and currency markets. Housing prices and transaction volumes have moderated, particularly in the private housing market, but local banks' exposure to the real estate sector was high, added the IMF.