Will Singapore's GDP be doomed by the flat manufacturing output?

Output has dropped -1.3% in July-August 2016.

Despite the slight improvement in the city-state's industrial production, its real GDP is feared to endure more downward pressure as slower growth unfolds in 2H16.

According to a report by Maybank Kim Eng, Industrial Production (IP) dropped -1.3% YoY in July-August, in sharp contrast to the 1.4% growth in the the second quarter.

The report said this suggests a downward pressure on real GDP growth in 3Q16.

"Real GDP growth was sustained at +2.1% YoY in 2Q 2016 as manufacturing rebounded to balance against the slowdown in services and construction," Maybank noted.

To recall, IP rose marginally by +0.1% YoY in August alone, gaining momentum from a 3.5% contraction in July.

With this, Maybank forecast full-year GDP growth of 1.8%, factoring in a slower growth in 2H16 after a 2.1% expansion in 1H16.