SINGAPORE, Aug 11 (Reuters) - Singapore"s bellwether economy expanded more than initially estimated in the second quarter and the government raised its forecast for 2021 as COVID-19 vaccinations progressed at home and in other key markets. Gross domestic product (GDP) is forecast to grow 6% to 7% in 2021, versus a prior estimate for an expansion of 4 to 6%, the Ministry of Trade and Industry said. GDP grew 14.7% year-on-year in the second quarter, higher than the 14.3% growth seen in the government"s advance estimate. Analysts had expected a 14.2% increase, according to a Reuters poll. In absolute terms, GDP remained 0.6% below its pre-pandemic level in the second quarter of 2019. On a quarter-on-quarter seasonally-adjusted basis, the economy contracted 1.8% in the second quarter, a reversal from the 3.3% expansion in the prior quarter. "Barring a major setback in the global economy, the Singapore economy is expected to continue to see a gradual recovery in the second half of the year, supported in large part by outward-oriented sectors," said Gabriel Lim, permanent secretary for trade and industry. He said easing border restrictions would also help in the recovery of consumer-facing sectors and alleviate labour shortages in sectors that are reliant on migrant workers. However, aviation- and tourism-related sectors are projected to recover more slowly than previously expected, with activity expected to remain significantly below pre-COVID levels even by the end of the year. The small and open economy is charting an uneven recovery after posting its worst ever recession last year due to the pandemic. Much of its fast growth this year is due to the low comparison base of last year when the virus paralysed economies around the world. The central bank had maintained its accommodative monetary policy at its last meeting in April. The next policy review is due in mid-October. The revised 2021 forecast was consistent with the current monetary policy stance, which remained appropriate, said Edward Robinson, the deputy managing director of the Monetary Authority of Singapore. Economists do not expect the MAS to make any moves in October, citing benign domestic inflation and the need to measure the effectiveness of vaccines against new virus variants, which will impact the pace of reopening and recovery. "That gives them more room to respond and probably tighten in April next year," said Brian Tan, regional economist at Barclays. Jeff Ng, senior treasury strategist at HL Bank, expects economic activity to improve in 2022. "Going forward by the end of the year, Singapore will be looking to move forward to the endemic stage of the recovery," he said. Reporting by Aradhana Aravindan and Chen Lin in Singapore; Editing by Sam Holmes Our Standards: The Thomson Reuters Trust Principles.