Singapore's Monetary Authority said yesterday in its semi-annual macro economic review that the oversupply in the global IT industry is likely to weigh on domestic electronics-related industries.

"The current softness in the IT industry appears to be largely a supply-side phenomenon, arising from the over-estimation of demand on the part of semiconductor manufacturers," the MAS said, adding that the supply glut is expected to ease in the latter half of the year.

But the central bank believed other non-IT related industries will provide support this year. In particular, the transport engineering and biomedical sectors will be key supports.

"In particular, the transport engineering and biomedical clusters will remain the two star performers," it said.

In addition, economic activity will also be buttressed by the continued growth in the services industries, including financial and business services as well as the tourism-related cluster.

The central bank reiterated its forecast for the economy to grow at 4.5 to 6.5 percent in 2007, down from 7.9 percent recorded last year.

The MAS also estimated that the increase in the Goods and Services Tax (GST) to 7 percent from current 5 percent from July will raise consumer price index (CPI) inflation by about 0.5 percent point in this year and next.

However it said that the full extent of the impact will be tempered by other offsetting fiscal measures.

It reiterated its earlier forecast that this year's CPI inflation will come in at 0.5 to 1.5 percent, similar to the 1 percent registered last year.