Singapore's economy expanded 2.8% year-over-year in the fourth quarter, preliminary government data showed on Tuesday, outpacing the forecasts of some economists and supported by improvements in construction and manufacturing.

The fourth quarter gross domestic product (GDP) growth was faster than the 1% expansion in the third quarter of 2023.

For the full year of 2023, Singapore's economy grew 1.2%, moderating from the 3.6% growth in 2022.

Both OCBC economist Selena Ling and Maybank economist Chua Hak Bin said the year-over-year growth was better than they had anticipated in the fourth quarter. Ling was expecting a 1.8% expansion, while Chua looked at 2.5%.

"Green shoots are sprouting in exports and manufacturing, brightening the outlook for 2024," said Maybank's Chua, who expects GDP growth of 2.2% in 2024.

OCBC's Ling forecast range for 2024 is 1-3%, in line with the trade ministry's projection.

"The key question is how much of a pickup in growth momentum we will have this year given the current uncertainties over whether the U.S. will escape a recession, and if or when the Fed will cut rates, and how geopolitics will play out with the U.S and other elections," she said.

On a quarter-over-quarter seasonally adjusted basis, GDP expanded 1.7% in the October to December period, extending the 1.3% expansion in the third quarter.

Monetary policy is due for review no later than Jan. 29, said the central bank on Tuesday. The Monetary Authority of Singapore (MAS) has increased the frequency of reviews from twice a year to quarterly starting in 2024.

In October, the MAS left policy settings unchanged as inflation in the city-state moderated.

Singapore's core inflation slowed to 3.2% in November last year from a peak of 5.5% in January and February.