Manufacturing growth to return to positive territories in 4Q23: experts

In July, output rose by 4.1% MoM.

Experts are now more positive about their forecast that Singapore’s manufacturing momentum will improve further in the second half of the year, following the month-on-month increase in industrial production in July.

RHB’s Senior Economist Barnabas Gan said Singapore’s manufacturing growth will likely return to positive territories in 4Q23, “with the balance of risks tilted for positive YoY growth to be seen in late 3Q23.”

“Since early 2023, we believe that Singapore’s growth may slow in 1H23 but pick up in 2H23, a view that is gradually turning to fruition,” Gan said.

“Our in-house GDP leading index for Singapore suggests GDP growth momentum to improve in 3Q23, in line with the green shoots seen in ASEAN-centric economic data. We think these green shoots will turn into trees in the next two months, with the recovery of global trade and manufacturing momentum to persist in 2H23,” Gan added.

UOB Senior Economist Alvin Liew, however, warned of risk factors to the growth of manufacturing output, including the volatile biomedical cluster.

“With IP contracting by -5.8% YTD, we maintain our forecast for Singapore 2023 manufacturing to contract by -5.4%, which implies a tepid recovery profile in 2H23,” Liew said.

Gan, meanwhile, expects the full-year IP growth to clock in at 0%, “with the balance of risks tilted to surprise on the downside. “