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Is the worst over for the Singapore economy?

Suhaimi Abdullah - Getty Images

Singapore's gross domestic product (GDP) for the second quarter of the year was revised higher on Monday, leading some analysts to suggest the economy's gloomy times could soon be over.

On an annualized basis, GDP rose 15.5 percent on the previous quarter, faster than an advanced estimate made a month ago of 15.2 percent, and above analyst expectations of 14 percent. The positive data comes after the Singaporean government hiked its growth outlook for 2013 to between 2.5 percent and 3.5 percent last week, from between 1 and 3 percent.

Now a number of analysts are turning more bullish on the economy and forecasting that the worst could be over.

(Read more: The quiet evolution of the Singapore consumer)

"We are keeping our fingers crossed and that if all goes well, we could even exceed 3.5 percent," said Seng Wun Song, regional economist at Singapore based CIMB bank. "We need all the bits to come together, and [this is] providing no external shocks go off."

Joey Chew, regional economist at Barclays, also upgraded his forecast for Singapore's growth to 3.1 percent in 2013, from 2.3 percent.

"Stronger-than-expected growth outcome in the first half of the year (2 percent year-on-year) owing to robust services activity, a low base in the first half of the year, and an improving global backdrop, led us to raise our full-year growth forecast," said Chew.

(Read more: Red flags for Singapore economy as exports slump)

Singapore's export-focused economy has been grappling with a raft of headwinds in recent years, including slowing demand from China and the euro zone, and the challenge of high inflation. As a result, the city state posted a meager 1.3 percent growth in 2012, down from 5.2 percent in 2011.

Although the second-quarter data was viewed by many analysts as encouraging, some voiced concerns about the continued disparity between growth in the services and manufacturing sectors.

On a year-on-year basis, the manufacturing sector only grew by 0.2 percent, although this was an improvement from the previous quarter when it logged a 6.7 percent contraction. By contrast, the services sector surged by 5.6 percent on the year.

(Read More: Bottom Line on Singapore GDP: Curb Your Enthusiasm)

CIMB's Wun said the recovery of Singapore's economy hinged on a balancing-out of growth in both services and manufacturing.

"Much will depend on the recovery of the trade sector. We've seen strong trade out of China, Korea and Taiwan, which has been encouraging. It suggests we will get a recovery in the second half of this year (in Singapore)," he added.

However, other analysts were less upbeat and warned that the positive data masked some worrying details.

"The message was clearly put when the Ministry of Trade said they were only slightly more upbeat on the second half of the year," said Vishnu Varathan, market economist at Mizhuo Bank. "There could be an uptick but I don't think they [the Ministry of Trade] are expecting a strong or sustainable rebound. This is largely because the manufacturing sector is still not performing very well largely due to exports."

Analysts at Credit Suisse also warned that Singapore's economic strength may not be maintained due to high inventory levels, an unsustainable strength in the financial services sector and continued weak demand for Singapore exports from the U.S..

(Read More: Singapore Faces Choppy Recovery: Central Bank)

By CNBC's Katie Holliday: Follow her on Twitter @hollidaykatie

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