Manufacturing to ease to low single-digit growth in Q2

In Q1, growth was at a +7.9% pace. 

Experts expect the manufacturing momentum to ease to low single-digit growth in the second quarter (Q2), following a +7.9% pace in the first quarter.

In a report, Maybank said the expected pacing will be due to the “slowdown in non-chip sectors such as petrochemicals and pharmaceuticals, due to weakening global demand.”

In May, petrochemical and pharmaceutical declined by 14.7% and 14.8%, respectively. The decline in these two segments dampened the growth in the biomedical (3.4%) and chemicals (-7.2%) clusters, in the same month.

Higher base effects for semiconductors, on the other hand, will help the sector’s growth in the coming months and also provide some lift to Q2 gross domestic product (GDP), said Maybank.

Semiconductors single-handedly drove electronics to its fastest pace of growth since December 2020, with a 33.6% increase in May.

“Chip production is more resilient than our initial expectations despite disruptions from China’s lockdowns and slowing global growth,” said the analyst.

Given the strong performance of semiconductors, Maybank said they expected GDP to be around 3.5% to 4%.