Singapore's industrial production feared to remain sluggish

A decline of 4.1% is forecast.

According to DBS, industrial output and export performance have remained sluggish. And today’s industrial production index for Dec12 should further reinforce this point, particular after the poor set of non-oil domestic export (NODX) figures in the month. 

Here's more from DBS:

December NODX contracted 16.3% YoY (1.8% MoM) on account of declines in both electronics and pharmaceutical exports. Although NODX and industrial production do not always run parallel to each other due to fluctuations in inventories, the signs are there for a poor outcome today.

A decline of 4.1% YoY has been penciled into our forecast, which is essentially weaker than the implied -2.3% from the recent advance GDP estimates. That said, this weaker than expected production output is not enough to drag the economy into the red. Overall GDP growth may get revised downwards marginally but the economy will still avert a technical recession for the second time in a roll.

That said, economic data has been improving in many Asia economies but Singapore has not been able to benefit from this recent development due to its declining competitiveness. A strong Sing dollar and the rapidly rising business costs domestically will continue to weigh down on industrial and export performance in the coming months.