V-shaped recovery expected in some manufacturing sectors despite contraction

Demand will pick up for transport engineering and general manufacturing.

Singapore industrial production may have experienced contraction in January this year but RHB said there will be recovery for some segments of manufacturing in the second half of 2023.

Amongst these are transport engineering, general manufacturing, and biomedical manufacturing, which will see an increase in demand because of economic reopening and increased travel.

Biomedical manufacturing will also see a boost because of low base effects.

Lunar New Year may also be blamed for the decline in IP in January, said RHB.

Further contraction

UOB said the IP went down 1.1% MoM in January, the fourth consecutive month of yearly decline and the worst streak since 2015. 

The analyst said the decline was attributed to chemicals, precision engineering, and general manufacturing. 

Low manufacturing outlook is expected to persist due to weaker external demand, UOB also said in its report.

This year’s manufacturing outlook is expected to shrink by 5.4%, whilst in-person services may fare better due to various upside growth factors.