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UOB Group’s Senior Economist Alvin Liew gives his opinion on the recent data releases in Singapore.

Key Quotes

“Singapore’s industrial production (IP) beats market expectations with a solid rebound of 17.9% y/y (+7.2% m/m sa) in Nov… In addition, Oct’s decline was revised slightly to -0.8% y/y, from -0.9% y/y. Excluding biomedical manufacturing, IP still grew by an impressive 14.0% y/y (+6.0% m/m sa) in Nov.”

“While a very favourable base effect (IP contracted 12.3% y/y in Nov 2019) did play a part in the strong rebound of the Nov IP, the surge in manufacturing activity could also be attributed to better performance of the key manufacturing clusters.”

“Both electronics and biomedical clusters are expected to perform strongly in the coming months, on the back of robust electronics demand and Singapore’s position in producing and supplying biomedical products and supplies during this COVID19 pandemic. This will continue to lift overall manufacturing activities into 2021. As for the downside, COVID-19-related restrictions should continue to discourage international travel into 1H 2021, even as the COVID-19 vaccine progressively gets rolled out, which in turn will weigh on tourism-related demand and inhibit any meaningful growth in the transport engineering and general manufacturing clusters in the near term.”

“Accounting for the latest Nov manufacturing data, year-to-date manufacturing growth is now at +6.5% y/y (up from 5.4% y/y in the first 10 months of 2020). While we keep our full-year industrial production growth forecast to average +5.5% and full year GDP contraction at -6% in 2020, we acknowledge the risk is for IP growth to be better than our forecast, and that may translate to a smaller GDP decline.”