Economists remain optimistic despite a modest performance in January, expecting a stronger full-year showing for manufacturing
Singapore’s industrial production (IP) grew by 1.1% year-on-year in January 2024, reversing a 2.4% decline in December 2023, according to data from the Economic Development Board (EDB). However, the performance fell short of economists’ expectations, who had forecasted a 3.7% expansion. The increase was largely driven by growth outside the volatile biomedical manufacturing cluster, which saw a 5.4% rise excluding biomedical, compared to a smaller 0.6% growth in December.
The disappointing January figures come amid weaker output in key sectors, including electronics, which saw a 3.4% decline from the previous year. Other clusters, such as biomedical manufacturing and general manufacturing, also recorded drops, with the biomedical sector experiencing a sharp 25.9% fall. However, some sectors, like transport engineering and precision engineering, saw strong gains, with transport engineering growing 43.5% and precision engineering increasing by 27.7%.
Despite the underwhelming start to the year, economists are optimistic about Singapore’s manufacturing sector for the rest of 2024. DBS economist Chua Han Teng expects gradual improvements throughout the year, supported by a global recovery in trade. Similarly, RHB’s Barnabas Gan anticipates stronger momentum from Q2 onwards, driven by positive growth forecasts for the US and China.
OCBC’s Selena Ling advised against overreacting to one month’s performance, pointing out the seasonal effects of the Chinese New Year holidays in January, which may have impacted production. Economists remain confident that Singapore’s factory output will recover and show better results as the year progresses, with global demand for Singapore-made goods expected to rise.
