IP to contact 7.0% in 2023: forecast

Experts said weak external demand persist for the rest of the year.

Despite an improvement in the industrial production (IP) print in September, experts remain hesitant to call for a broad-based manufacturing recovery.

UOB’s Head of Research, Suan Teck Kin, said there needs to be “ further improvements and several above-50 PMI readings for greater certainty on the progress of manufacturing recovery.”

For 2023, Suan expects IP to contract by 7.0% given that weak external demand will persist for the rest of the year.

“Headwinds in the manufacturing sector remain given the weak external demand, which could persist for the rest of 2023, exacerbated by tight financial conditions stemming from an elevated interest rate environment,” Suan said.

“The overall PMI could remain slightly above 50 for the rest of the year although we remain cautious on the weakening external outlook,” Suan added.

The electronics sector, meanwhile,  will see a few more months of sub-50 PMI prints before “positive prints emerge.”