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ING analysts note that in Singapore, after several months of roughly stable production, the 7.5% seasonally adjusted monthly decline in the August production figures come as a blow to ING’s hope that the worst of the global tech slump has passed.  

Key Quotes

“Please note that we are not blaming the trade war for this weakness. If that were the case, we might expect to see declines in all production sectors – we don’t. The weakness is, as was the case earlier this year, highly concentrated in the electronics sector, and within this, semiconductors, which fell by 29.6%YoY. In  July, semiconductor production had recovered to +1.4%YoY.”

“If we are to blame the trade war for any of this, it may be that the latest round of US tariffs on Chinese consumer electronics goods had  messed with seasonality in semiconductor production as producers try to run ahead of tariffs on these goods. If this was the case, then we might expect  some sort of return to trend, albeit at a lower level  in the months ahead. But this is just speculation at this point  and does not tally with what we are seeing in the export sector, which has also been a little more positive.  “

“For 2019, full-year GDP will probably now register only 0.3% growth, even with a bounce in 4Q19 and a negative total is not impossible. We had been looking for growth of 0.7%.”