Singapore's economy is gradually regaining its upward momentum as the developed nations recover, prompting the central bank to tip "modest growth" for the local economy this year and next year.

The Monetary Authority of Singapore (MAS) expects gross domestic product growth to come in at 2.5-3.5 per cent for the whole of 2013, and this is "unlikely to be significantly different in 2014", it noted in its twice-yearly macroeconomic review on Tuesday.

It said the local economy will benefit from "the positive effects of a recovery in the developed countries", which are likely to outweigh the "current sluggishness in emerging Asia", Singapore's exports remain more closely tied to developed economies than to its immediate neighbours, MAS added.

"External-facing activities are expected to provide the main support and domestic demand should still be resilient," noted the MAS' economic policy group.

But it also cautioned that volatile patches could still occur from time to time until the world recovery becomes more even and sustainable.

Recovery in the advanced economies seems to be on a surer footing, it noted, while emerging Asia will need to adjust to a rise in global interest rates.

The MAS also tips inflation to pick up over the next few quarters, with domestic price rises remaining as the key source of inflation.