Singapore's economy will expand at a slower pace in 2008 than earlier forecast, hurt by weaker demand in key export markets, while high oil and food prices will likely stoke inflationary pressure, a quarterly poll shows.

However, the Singapore central bank is not expected to tighten monetary policy further at its next meeting in October to rein in consumer prices - at a 26-year high - and will probably keep its current policy of allowing a gradual rise in the Singapore dollar , a Reuters poll of 10 economists showed.

The poll forecast 2008 growth at 5.4 per cent, weaker than 5.6 per cent in a similar poll conducted in March, but within the government's forecast range of 4-6 per cent.

'Growth in the first quarter is as good as it gets and will slow in the coming quarters. Inflation will remain a priority (for the central bank),' said Mr Alvin Liew, an economist at Standard Chartered Bank.

Singapore's finance minister warned last week that high energy prices threatened the country's official 2008 inflation target .

A fuel price hike in neighbouring Malaysia, which sharply raised fuel and gas prices in June to save the government 13.7 billion ringgit (S$5.7 billion), will boost prices, Mr Liew said.

Singapore buys nearly half of its imported vegetables and all of its imported eggs from Malaysia, local media said. Food is the largest item in the CPI basket, accounting for 23 per cent.

Still, the central bank is unlikely to tighten policy as the effects of last year's two-percentage-point hike in sales tax will fade from year-on-year calculations, economists said.

The central bank will also have to balance the need to curb rising prices with the need to protect growth, a dilemma faced by central banks around the world, economists said.

'We are seeing a bit of an exports-led slowdown,' said Mr Vishnu Varathan, an economist at Forecast, adding that the credit crunch is dragging on the financial services sector as well.

Factory output posted steep declines in April and May, providing more evidence that poor demand in the United States and Europe was hurting Asian manufacturers. The United States and Europe buy about a third of Singapore's non-oil exports.

The Monetary Authority of Singapore conducts policy by managing the Singapore dollar within a secret trading band against a basket of currencies instead of setting interest rates.

The central bank tightened monetary policy in April by moving up the centre of the band, its most aggressive move since the 2003 SARS outbreak, to tame inflation.

The economy grew an annualised 14.6 per cent in the January-March period from the previous quarter and expanded 7.7 per cent in the full year of 2007.