Production growth to pick up by 12.2%

Industrial activities will see a slight improvement from the 10.5% value in the previous report.

DBS reported however that the upside is limited given ongoing weakness in demand. Apart from the festive season effect, which typically see slower production activities, recent weakness in export performance also reflects the lacklustre demand.

The non-oil domestic export growth for February was up by a modest 2.9% MoM sa and 7.8% YoY, not enough to render a sharp rise in output. Continued growth moderation in electronics can be expected but much lies in the performance of the volatile pharmaceutical industry, which could swing things sharply either way.

Nevertheless, they expect a stronger recovery in the US as well as a buoyant regional demand to bring about a more robust manufacturing performance in the second half of the year. That said, there is near-term downside risk in the form of weaker demand from Japan arising from the recent chain of events. But the impact will likely be temporary as demand will most likely pick up again during the reconstruction phase.