Manufacturing sector shows signs of recovery, but challenges remain in the global economic environment
In July 2023, Singapore’s factory output showed a slower decline of 0.9% year-on-year, marking an improvement compared to the previous month’s 6.6% contraction. The data, released by the Singapore Economic Development Board, revealed that excluding the volatile biomedical cluster, manufacturing output grew by 1.7% compared to July 2022. This marks the 10th consecutive month of contraction, though the outcome was better than the 3.8% decline anticipated by private-sector economists.
Economists have expressed cautious optimism regarding the recovery of the manufacturing sector in the second half of 2023. DBS economist Chua Han Teng noted that the return to growth in the key electronics segment contributed positively to the performance. However, he also cautioned that recovery would be fragile, given ongoing global economic challenges.
RHB senior economist Barnabas Gan suggested that Singapore’s growth momentum had likely reached its lowest point in the second quarter of 2023. Despite some signs of stabilization, such as the turnaround in global semiconductor sales and optimism around artificial intelligence-related chips, external risks such as geopolitical tensions and a slowdown in China remain concerns.
On a month-on-month seasonally adjusted basis, manufacturing output increased by 4.1%, continuing the positive trend from the previous month’s 3.3% growth. Excluding the biomedical cluster, the month-on-month increase was even higher at 6.9%. The performance of the manufacturing sector aligns with the weaker trend seen in non-oil domestic exports, underscoring the ongoing pressures in global trade and production.
