Signs of a broader recovery in manufacturing to emerge mid-2024

For the whole year, experts predict IP to expand by 4.0%-5.0%.

Experts from UOB foresee signs of a broader recovery in manufacturing towards the middle of 2024 as "central banks in major advanced economies may begin to lower policy rates."

UOB underscored that the consequent easing of financial conditions supports consumption and investment activity, implying a gradual recovery in external demand.

"We expect the Federal Reserve to begin its rate cut cycle in mid-2024, with a cumulative 75bps of rate cuts pencilled in our 2024 forecast. In China, further policy support beyond the recently announced 50bps RRR cut effective 5 February may portend some uplift in external prospects," UOB said.

In 1H24, however, UOB said, "sequential momentum could remain fundamentally weak."

For 2024, UOB expects IP to expand by 4.0%.

"In 2024, year-on-year recovery in IP will be partly driven by base effects given the downturn in 2023," UOB commented.

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RHB also believes that manufacturing momentum will strengthen in 2024, with "the uptick in growth to be more material in 2Q – 4Q24."

"The improvement in Singapore’s manufacturing momentum is underpinned by our sanguine global economic outlook, whereby our GDP growth forecasts for the US and China are above consensus at 2.2% and 5.0%, respectively," RHB stated.

Whilst expecting a stronger manufacturing momentum in 2024, RHB cut its 2024 growth forecast to 5.0% from 5.5%.

RHB downgraded its forecast, given the likely lower GDP for 2023.

"Singapore’s GDP in 2023 will likely be closer to 1.0%, compared to the previously published 1.2%, assuming ceteris paribus," RHB stated.

"The downgrade takes into account the downward revision of IP numbers in 2023, whilst our assumptions for an improving growth momentum backdrop into 2024 remain intact," RHB added.