JAKARTA - Singapore’s manufacturing output grew just 0.1 percent year-on-year (yoy) in August. IHS Markit’s Asia Pacific chief economist Rajiv Biswas has provided following commentary on the report.
Key Points:
- Singapore’s manufacturing output grew just 0.1% year-on-year (yoy) in August.
- The marine and offshore engineering sector remained a major drag on overall manufacturing output, down 16.8% yoy in August.
- The pharmaceuticals sector was also weak, with a 14.1% yoy decline in output recorded in August, exactly the same pace of decline as in July.
- Output in the petrochemicals segment was down 17.1% yoy in August, constraining the overall growth in chemicals output to only 1.8% yoy. The petrochemicals sector had also shown large declines in output in June (-14.5% yoy) and July (-23.1% yoy).
- A bright spot in the overall manufacturing sector performance was the electronics sector, which showed a 10.8% yoy rise in August, following strong growth of 16.5% yoy in July. The semiconductors segment was the key contributor to the positive performance, with a 19.7% yoy rise.
Outlook:
Singapore’s manufacturing sector has continued to experience recessionary conditions during 2016 year to date, with total manufacturing output during January to August 2016 down -0.1% yoy compared to the same period a year ago. With world oil prices only expected to stage a gradual recovery, no rapid improvement in conditions is expected for the marine and offshore engineering industry.
IHS Markit expects the price of Brent crude to rise from around USD48 in Q4 2016 to USD53 in Q4 2017. With weak external demand conditions from China’s economic slowdown as well as slow growth in the EU and Japan, Singapore’s manufacturing sector outlook for 2017 remains subdued.
IHS Markit forecasts that Singapore’s GDP growth in 2017 will be 1.9%, with continued headwinds for Singapore’s manufacturing sector being a key factor constraining the economic growth outlook. (*)