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Economist Barnabas Gan at UOB Group assessed the industrial sector figures in Singapore.

Key Quotes

“Singapore’s industrial production (IP) surprised market estimates with an encouraging +3.4% y/y growth in January 2020. This marks the fastest year-on-year growth pace in three months (Oct 2019: +3.9% y/y). On a month-on-month seasonally adjusted basis, industrial production rose by a strong 18.2%, the firmest growth since January 2011.”

“The pick-up in industrial production growth momentum was underpinned chiefly by a surge in biomedical manufacturing and precision engineering output.”

“A mix of seasonality factors and growth headwinds were likely the key drivers for the decline in the remaining clusters.”

“The prognosis for Singapore’s industrial production is arguably dim at this juncture, owing to potential headwinds from several uncertainties, including the COVID-19 outbreak. Even as Singapore’s tourism and retail sectors experienced the initial negative knockon effects from the reduced tourism activities, manufacturing confidence may have already deteriorated to-date as the global supply chain weathers disruption from the numerous factory closures in China… As such, we downgrade our full-year outlook for industrial production to contract by 1.0% in 2020, down from our initial forecast for a ‘cautiously optimistic’ view of +0.5% y/y.”