Dead cat bounce: Why Singapore's GDP rebound in 2015 will still be disappointing

Growth levels will be lower.

According to Morgan Stanley's Back-to-School study, weaker-than-expected 2Q14 GDP growth owing to weakness in the manufacturing sector. As it is, an increasing trend of servicisation within the manufacturing sector towards R&D and engineering is perhaps already exerting a dampening effect on industrial production output and, more recently, firm-specific/ relocation issues have resulted in %YoY declines in electronic production since Apr-14.

Here's more from Morgan Stanley:

The impact is expected to stay in the %YoY numbers until base effects peter out next year, and this has already impacted non-oil domestic exports, where growth is already underperforming that seen in global and regional AXJ exports.

MS economics team revised down its 2014/2015 GDP growth forecasts from 3.2%/3.7% to 3.1%/3.5%, respectively. This is why despite the rebound in 2015 GDP from base effects growth level in Singapore is still expected to be lower compared to the original forecast.

Singapore’s growth momentum is expected to be lower compared to pre-GFC days as global growth is unlikely to reach the 5% CAGR seen before and the changing nature of global demand cannot be fully capitalized on by the export machine in Singapore.

More broadly, we think an interplay of other cyclical and structural forces would continue to shape and weigh on macro outlook in Singapore. Outside of what has been mentioned above, several other factors are noteworthy.