UOB Group’s Economist Barnabas Gan assesses the recently published results from the industrial production in Singapore.

Key Takeaways

“Industrial production expanded 3.4% y/y (-12.6% m/m sa) in Mar 2022, beating market expectations for a weaker growth of 2.0% y/y (although the sequential decline is worse than the projected -11.9% m/m sa). Excluding biomedical manufacturing, industrial production rose 9.7% y/y.”

“Manufacturing activities remains underpinned by the global trade recovery as well as the gradual reopening of international borders. This was seen as the transport engineering cluster grew 20.7% y/y on the back of higher production of aircraft parts and offshore projects activities. Meanwhile, sustained demand from 5G markets and data centres led the semiconductor segment in the electronic cluster.”

“Given the latest industrial production data, Singapore’s manufacturing growth clocked 7.1% y/y in the first quarter of 2022, against the recent MTI’s advance estimates of 6.0% y/y expansion. This suggests that Singapore’s GDP in 1Q22 will likely be revised higher to 3.6% y/y (from MTI’s advance estimates of 3.4% y/y).”

“In all, our outlook is for full-year manufacturing to grow by an average of 4.0% in 2022. This suggests that despite the high-base growth rate seen in 2021, global trade activity is expected to stay buoyant in the year ahead.”