The Trade and Industry Ministry (MTI) now expects the economy to expand by 3.5 per cent to 4 per cent, up from the 2.5 per cent to 3.5 per cent tipped previously.
Its revision comes after growth hit 5.8 per cent for the July to September period - easily trumping market expectations.
Manufacturing, which expanded 5.5 per cent from a year ago, was behind much of the surge, with electronics and a sharply rebounding transport engineering industry the main contributors.
Bank of America Merrill Lynch economist Chua Hak Bin said the manufacturing segment is "finally staging a more visible improvement after a long lull", and the economy is now growing more broadly across sectors.
Despite the third-quarter numbers, MTI said risks remain, including uncertainty over the United States Federal Reserve's tapering of its monetary stimulus programme and possible flare-ups in the euro zone.
The fragility of some economic areas was signalled by the poor showing of non-oil domestic exports in the third quarter. These slipped 3.3 per cent in the July to September period compared with a year earlier, trade agency IE Singapore said yesterday.
Although the full-year figure is likely to be a decline of between 4 per cent and 5 per cent, exports may have turned the corner with last month's positive numbers. IE Singapore said it is expecting total trade to grow between 1 per cent and 2 per cent next year.
MTI also announced next year's growth forecast for the first time, tipping the economy to grow 2 per cent to 4 per cent.
"The global economic outlook is expected to continue to improve modestly in 2014, supported by a slow recovery in the (US) and euro zone," it said in a statement.
It added that sectors relying on the global economy, such as manufacturing and transport and storage, will likely underpin growth, but some labour-intensive sectors may be weighed down by the tight labour market.
Barclays economist Joey Chew does not expect expansion to accelerate next year.
This is partly due to expected sluggishness in some of Asia's larger economies such as Indonesia and China that might hit growth here.
Bank of America Merrill Lynch's Dr Chua said restructuring and stricter foreign worker policies might limit the extent to which Singapore can capitalise on a recovering global economy.
Mr Chiou Lid Jian, general manager of integrated circuit design and development company ASE Singapore, said orders picked up in the third quarter compared with the first half of the year.
It expects revenue growth of 6 per cent this year, well under the 25 per cent expansion last year, but that number will be hard to beat as the smartphone industry - a major source of orders - was growing explosively then, he said.
In the third quarter, services continued to grow strongly, with a 6.3 per cent expansion boosted mainly by wholesale and retail trade, and finance and insurance. Construction grew 5.3 per cent, down from 6.9 per cent in the preceding quarter, due to slower growth in public non-residential building works.
Second-quarter expansion, previously pegged at 4.2 per cent, has been revised up to 4.4 per cent.
Source: Straits Times, 22 Nov 2013