Biomedical sector drag leads to contraction, despite gains in electronics and chemicals
Singapore’s factory output contracted by 2.5% year-on-year (yoy) in December 2024, driven largely by a steep decline in the volatile biomedical sector, according to data from the Singapore Economic Development Board (EDB). This marks a reversal from the previous month’s revised growth of 0% and underperformed against economists’ expectations of 1% growth.
Excluding the biomedical cluster, factory output grew 0.5%, though this growth rate slowed compared to November 2023, where it was 1.1%. The electronics cluster showed the most significant growth, expanding 6.3% yoy in December, up from 5.1% in November, with the semiconductor segment seeing a notable 17.7% increase due to improved demand in select markets, particularly smartphones.
Despite this, for the whole of 2023, Singapore’s factory output declined by 4.3%, with the biomedical manufacturing sector seeing the largest drop at 9.6%. The precision engineering cluster also experienced a contraction of 7.4% yoy in December, although this was an improvement from November’s 12% decline.
The biomedical sector posted a substantial drop of 23.9% yoy in December, mainly due to a 45% decline in pharmaceuticals output, reflecting lower production of biological products and changes in the mix of active pharmaceutical ingredients produced. This sector’s output also faced declines throughout 2023, with the overall biomedical manufacturing segment shrinking by 9.6% for the year.
Overall, while there were areas of growth in electronics and chemicals, the data underscores the fragility and unevenness of Singapore’s manufacturing recovery, as DBS economist Chua Han Teng noted. Economists now predict a downward revision of Singapore’s fourth-quarter growth in February 2024, with full-year growth potentially adjusted to around 1% from the initial estimate of 1.2%.
