Singapore is banking on an unlikely manufacturing turnaround to save its economy: analysts

Services is already in a technical recession.

The city-state can still see its economy recovering this year, but there’s an overwhelming chance it wouldn’t happen unless the manufacturing sector surges.

According to DBS economist Irvin Seah, risks lie ahead for the Singapore economy as the services sector, which constitutes about two-thirds of the Singapore economy, is already in “technical“ recession, after having already contracted two quarters in a row.

“Hence, unless the manufacturing sector surprises in a big way, we are unlikely to see the economy recovering this year,” a DBS report said.

Meanwhile, DBS believes big infrastructure projects like the Singapore – KL high speed rail (HSR) may be needed to give a structural lift to growth prospects in the longer term.

“On this end, there are tentative signs that the project is likely to be a reality after more than 20 years of delay, when the Land Transport Authority of Singapore (LTA) called for tender to be closed in October for a Joint Development Partner for the project,” the report noted.

Additionally, other ongoing infrastructure projects include the SmartNation, and the extension of Mass Railway Transport (MRT) lines.