Singapore economy expected to be weak: OCBC

Manufacturing holds the key, and it is looking shaky.

OCBC said:

The December PMI data probably implies some stabilization rather than an outright recovery in the manufacturing and electronics industries in Singapore in the near-term, albeit there have been more encouraging economic data recently elsewhere such as the US and China.

We still expect overall weakness the first half of 2012 for the Singapore economy due to relatively tepid demand conditions in some advanced economies and also due to the ongoing growth slowdown in the Chinese economy. The flash Q4 2011 GDP growth data already shows a moderation in the twin engines of manufacturing and services.

For the electronics outlook, the semiconductor book-to-bill ratio appeared to have bottomed in Sep 2011 at 0.71, albeit the October reading of 0.74 remains below par. For the biomedical sector, particularly pharmaceuticals, the production trends have also been relatively volatile, contributing to the uncertainty of whether the manufacturing sector excluding pharmaceuticals will hold up in the next one to two quarters.