The Grinch will not be stealing Christmas this year, not with the local economy displaying some unexpected strength as the year ends.

The Ministry of Trade and Industry (MTI) recently upgraded this year's growth forecast to 3 per cent to 3.5 per cent, up from an earlier estimate of 2 per cent to 3 per cent.

The buoyant numbers come despite rumblings of "volatile and uneven" growth earlier this year in the wake of US President Donald Trump's shock win in November last year, fears over trade tensions between the United States and China, and protectionist rhetoric.

Local shares made the most of the more positive sentiment. The Straits Times Index (STI) started 2017 well and broke through the 3,000 level easily, though it has not pierced the April 2015 high of 3,539.95 so far.

The index is up 18 per cent this year, while Hong Kong's Hang Seng has jumped 33 per cent. This is due in part to the Dow Jones Industrial Average surging over 25 per cent so far this year to pierce the 24,000-point level despite North Korea's missile testing.

Local stocks thrived, buoyed by optimism over the global economy and healthy corporate earnings growth. Banks, property and Internet and tech companies did well.

"Despite a more robust economy overall, growth rates were uneven across industries. Manufacturing did well but construction did poorly," said CIMB economist Song Seng Wun. "Services related to trade and logistics did well but those in media, advertising and food services didn't."

But after chalking up the second-highest percentage gain year on year since the 2009 financial crisis, the STI may have difficulty sustaining the second straight year of similar robust gains, OCBC Investment Research said. In 2009, the STI gained a whopping 58 per cent.

But that goal is still possible given the fairly high risk appetite, which is supported by healthy earnings and a possible cut in US corporate taxes next year. Private-sector economists expect growth next year to be steady with expansion of 3 per cent.