SINGAPORE: Singapore’s industrial output in August dropped 12.1 per cent year-on-year, falling for the 11th month. The continued industrial slump affects the economy as one of every five dollars of Singapore’s GDP comes from manufacturing.
While the official forecast expects little to no growth this year, the drop in output is steeper than expected. Economists expected a 3.1 per cent contraction, according to a Reuters poll.
Output declined in all sectors except transport engineering, showed official data released by the Economic Development Board on Tuesday (Sept 26).
- Transport engineering grew 16.2 per cent, with growth in the marine and aerospace segments as shipyard activities increased and demand for aircraft parts and maintenance rose.
- Biomedical engineering output declined by 1.8 year per cent. Though medical device production grew on the back of export demand, pharmaceuticals contracted 5.6 per cent.
- Chemicals output fell 5.9 per cent as petrochemicals and petroleum production both dropped.
- General manufacturing output decreased 6.1 per cent, including a 3.2 per cent decline in food, beverages and tobacco.
- Electronics output decreased by 20 per cent. Though the infocomm and consumer electronics segment grew 12.9 per cent, computer peripherals and data storage fell 13 per cent, and the semiconductor segment plunged 23.7 per cent.
The sharp drop in electronics output, reflecting faltering global demand, was mainly to blame for Singapore’s falling industrial production, reported Reuters.
Manufacturing plays a key role in the Singapore economy, accounting for 20 to 22 per cent of the gross domestic product (GDP).
So, sluggish industrial output hobbles Singapore’s growth prospects.
The Ministry of Trade and Industry (MTI) announced in August that the 2023 GDP growth forecast for Singapore has been narrowed to “0.5 to 1.5 per cent” from “0.5 to 2.5 per cent” after the manufacturing sector shrank more than expected.
The growth forecast was lowered after the manufacturing sector shrank 7.3 per cent year-on-year in the second quarter, following a 5.4 per cent drop in the first quarter.
Singapore has been narrowly averting recession, growing just 0.4 per cent in the first quarter and 0.7 per cent in the second quarter.
Prime Minister Lee Hsien Loong said in his National Day Rally speech:
“Hopefully, we will avoid a recession. Inflation is at last coming down, but it will probably stay higher than what we were used to.”