Experts unfazed by manufacturing dip, expect mid-2024 rebound

In January, output decreased by 5.7% MoM.

Economists remain positive about Singapore’s manufacturing sector despite the slowdown in its momentum in January, saying a broader recovery could emerge towards the middle of 2024.

“Central banks in major advanced economies may begin to lower policy rates as inflation in their respective economies moderate and inch closer to the 2% objective, with the consequent easing of financial conditions supporting consumption and investment activity, implying a gradual recovery in external demand,” said Alvin Liew, senior economist at UOB.

RHB Group Chief Economist & Head of Market Research, Barnabas Gan, isn’t also worried about Singapore’s January industrial production (IP) performance.

Gan believes the slowdown in sequential growth will decelerate in 1H24.

“Our proprietary GDP leading index is suggesting Singapore GDP growth to pick up in 1Q24, with externally-facing activities such as services, trade and industrial production to be chief growth engines. Overall, we keep our full-year IP growth at 5.0% for 2024,” Gan said.

“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,” Gan added.

Liew, on the other hand, forecast IP to expand by 4.0% in 2024.