SG manufacturing performance to contract for most of H1

But the significantly improved momentum last month suggested a better upturn.

Singapore's manufacturing performance might continue to contract for most of the first half of 2023 amidst a lacklustre external-facing recovery.

The country's industrial production (IP) in March 2023 contracted to 4.2% year-over-year (YoY) but grew to 9.3% month-over-month.

Transport engineering had a sizeable positive growth with 23.5% YoY, followed by biomedical engineering with 7.0% YoY, whilst output in electronics (8.0%), chemicals (11.8%), and precision engineering (7.1%) fell.

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Barnabas Gan, RHB Senior Economist, said that its lacklustre high-frequency data surrounding non-oil domestic exports and purchasing managers index reinforced the flatline performance in its economic activity. 

"With Singapore being an export-oriented economy, we expect manufacturing activities to slow with the softer export demand," Gan said.

However, Gan said the significantly improved momentum in the IP last month suggested a better upturn.

Gan then expected the growth momentum observed in Singapore's IP would lead global markets to display risk-taking behaviour. However, a potential downturn centered around China might be a significant risk factor for its economic outlook and the global external demand.