O&M dominance is becoming a liability for Singapore: HSBC

Local manufacturing growth will deteriorate further in 2016.

Singapore manufacturing growth will likely unravel further this year, according to a report by HSBC.

While Singapore’s dominance in certain segments of offshore and marine engineering is impressive, this dominance risks becoming a liability. Global oil and gas capital expenditure is heading for a pullback for the second consecutive year, while rig overcapacity in China will constrain recovery.

The impact of low oil prices on manufacturing this year will be more pronounced in comparison to 2015 as orderbooks for Keppel and Sembcorp Marine wane. Along with petrochemicals and refining, HSBC estimates that oil-related manufacturing to reach 3.6% of GDP.

One respite for manufacturing, though, is that pharmaceutical output may see growth in Q1, particularly with new capacity installed last year, but a part of this may now be reclassified as services.