Singapore’s manufacturing growth off to ‘healthy start’ for 2018
SINGAPORE – The Republic’s manufacturing growth is off to a “healthy start” this year, economists said after latest figures showed output expanding by 5.9 per cent in March.
For the first three months of the year, total manufacturing output expanded by 9.8 per cent from a year ago. Excluding biomedical manufacturing, the January to March period saw output grow by 12.7 per cent, according to the latest manufacturing data released by the Economic Development Board (EDB) on Thursday (April 26).
The figures, which are in line with expectations, also prompted the economists to maintain their earlier forecasts for Singapore to grow at 4.3 per cent in the first quarter, and around 3 to 3.1 per cent for the full year.
Manufacturing growth figures for the first three months of the year point “indeed (to) a healthy start for 2018,” said Ms Selena Ling, head of treasury research and strategy at OCBC Bank. The expansion beat the bank’s forecast for year-on-year growth of 4.5 per cent.
Going forward, however, experts expect manufacturing growth to moderate. Maybank Kim Eng economists Chua Hak Bin and Ms Lee Ju Ye, for instance, wrote in a research note that manufacturing would “likely slow to the low single-digits in the coming quarters”, as high base effects from last year kick in.
Uncertainty on the global trade front due to a simmering spat between the United States and China could also affect business spending and dampen production growth.
“A large proportion of the global trade recovery is driven by capital and intermediate goods, and could slow if businesses defer or cancel their investments,” Mr Chua and Ms Lee wrote.
Ms Ling, however, said that it is “difficult to tell” if the US-China trade spat has had any dampening effects on regional manufacturing value chains. “Policymakers and central banks are probably closely monitoring the potential collateral damage that may arise if a compromise is not found,” she added.
According to the EDB, Singapore’s March manufacturing growth was supported by the electronics, chemicals, precision engineering and transport engineering clusters.
However, electronics output registered a slower pace of growth as expected by economists, expanding 12.4 per cent last month, compared to 17.9 per cent in February and 28.1 per cent in January.
The volatile biomedical manufacturing cluster declined by 5.4 per cent year on year, as output for both its pharmaceuticals and medical technology segments declined.
Meanwhile, the general manufacturing cluster also contracted by 0.6 per cent, due to declines in the printing and miscellaneous industries segments.
