Doug Fabian, editor of Making Money Alert and Successful Investing, says the Asian city-state’s economy is lagging its neighbors’, but he thinks it will catch up.

Singapore's economic outlook is not as rosy as a number of other Asian countries that are starting to see a recovery. However, the region's budding rebound sooner or later could help to pull Singapore's economy along for the ride.

Singapore's economy is heavily reliant on manufacturing. With demand for manufactured products generally down, the country's economy understandably has been weak. An 11-month slump in Singapore's exports has led to increased unemployment, which spurred the country's government to cut taxes and subsidize jobs.

The International Monetary Fund (IMF) estimates a 10% decline in Singapore's gross domestic product this year that could cause [it] to end up as the worst performer in Asia. Singapore's economy contracted 16.4% in the fourth quarter of 2008, compared to the same period in the previous year. The economy shrunk 19.7% in the first quarter of this year, versus the same quarter of 2008.

Independent observers have described the country's current recession as its deepest in 44 years. The good news for investors is that Singapore's economy may be close to bottoming out. If so, it could be a good time to become familiar with iShares MSCI Singapore Index (NYSEArca: EWS), an exchange traded fund (ETF) designed to provide investment results that correspond to the price and yield performance of publicly traded securities in the Singaporean markets.

EWS is advancing ahead of Singapore's economic turnaround. The fund is up 30% [so far this] year-, and much of this success can be attributed to growth in several key pillars of the manufacturing industry. These include the following sectors:

Electronic. The electronic index increased over the previous month, indicating higher levels of new orders from both domestic and foreign markets

Aerospace. Singapore is Asia's major aerospace maintenance, repair, and overhaul provider. Aerospace engine manufacturer Rolls Royce recently showed confidence in Singapore by relocating its supply chain into the country.

Clean energy. The government has identified this area as a key one for growth, especially in solar energy. The government has made a significant investment in the sector to increase research and development.

Biomedical. This sector grew 120.4% year-over-year in May, mostly because of a jump in pharmaceutical output.

Oil. Shell invested in a new $3 billion petrochemical cracker complex that is scheduled to start at the end of 2009. This refinery will be Shell's largest in the world.

Water. Domestic businesses recently won billion-dollar contracts from the government to build desalination plants, pumping systems, and pipe networks

Whether the boost for manufacturing will lead to a resurgence of Singapore's economy and buoy the performance of EWS is uncertain. But EWS could be worth considering for future investment if you think this Asian nation's prospects are on the rise.

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