Economists Remain Optimistic About Stronger Industrial Growth in 2024
Singapore’s industrial production (IP) recorded a 1.1% year-on-year increase in January 2024, reversing a 2.4% decline in December 2023. Despite this positive shift, the figure fell short of economists’ median forecast of a 3.7% expansion, as reported by the Economic Development Board (EDB) on Monday (26/02/2024).
Excluding the volatile biomedical manufacturing sector, factory output surged by 5.4% compared to January 2023, a significant jump from the modest 0.6% growth recorded in December. This follows improvements in Singapore’s Purchasing Managers’ Index (PMI), signaling an ongoing recovery in regional manufacturing activity.
Mixed Sector Performance
Half of the manufacturing clusters experienced output declines, with the key electronics sector shrinking by 3.4%, reversing December’s 6.2% growth. Most electronics segments posted losses, except for the infocomms and consumer electronics segment, which surged 23.8%. The biomedical manufacturing cluster saw a sharp 25.9% contraction, while general manufacturing dipped by 3.4%.
However, several sectors reported robust growth:
Transport engineering: Up 43.5%, driven by a 69.1% surge in aerospace output.
Precision engineering: Increased 27.7%, supported by gains in machinery and components.
Chemicals: Gained 3.8%, although petroleum output fell by 6.2% due to maintenance shutdowns.
Economic Outlook
Despite January’s weaker-than-expected performance, economists remain optimistic about Singapore’s manufacturing prospects. DBS economist Chua Han Teng acknowledged that recovery could be “gradual and fragile” due to global economic uncertainties but expects an improved outlook compared to 2023’s full-year contraction.
Similarly, RHB’s acting group chief economist Barnabas Gan predicts a stronger manufacturing rebound from Q2 2024, supported by above-consensus growth forecasts for the US and China. He noted that Singapore’s substantial increase in non-oil domestic exports suggests continued strong global demand, which should drive higher production levels in the coming months.
OCBC chief economist Selena Ling cautioned against placing too much weight on January’s data, citing seasonal factors such as the Chinese New Year holidays. She recommended evaluating the average growth over the first two months of the year for a more accurate assessment.
Although Singapore’s factory output has started 2024 on a slow note, signs of global trade recovery and increasing demand in key sectors indicate a potential rebound in the months ahead.
