Chart of the Day: Drug production drives growth for Singapore's struggling manufacturing sector

Growth will stumble without biomedical manufacturing.

Singapore's manufacturing sector has an unhealthy dependence on drugs. Strong gains in the pharmaceuticals segment again pushed up the overall industrial production index in May, offsetting the intensifying contraction in the transport engineering and chemicals sectors.

This chart from Maybank Kim Eng shows that the biomedical cluster is indeed the key pillar supporting overall manufacturing growth. Biomedical manufacturing contributed 2.7 percentage points in May, and has consistently been the strongest driver of growth since February.

In contrast, the transport engineering and general manufacturing clusters have been consistently shrinking in past months. The transport engineering cluster has been pummelled by weak oil prices, while the general manufacturing cluster has been impacted by weak global demand.

“Domestic demand is expected to drive industrial production growth as the global economy continues to be plagued with uncertainty on the back of fragile aggregate demand and easing commodity markets. Weak consumer and business spending on IT products together with elevated inventory levels will continue to drag growth potential in the electronics cluster,” said the report.