Singapore’s industrial output is expected to grow on a sluggish note and remain weak in the near term, mainly on existence of external headwinds amid subdued demand. Also contraction in exports along with decline in non-oil domestic export sales will also keep a check on industrial output growth.
The headline number due today is likely to a benign expansion of 0.6 pct y/y. While this is an improvement from a contraction of 0.5 pct in the previous quarter, the manufacturing sector still remains a concern.
The decline in the recent non-oil domestic export sales has been broad-based with contractions in exports of both electronics and non-electronics products. Moreover, except for Europe and Hong Kong, export growth to all key markets was in the red, underscoring the persistent weakness in global demand, DBS reported.
Moreover, the surge in March figures was dominated by an upswing in the bio-medical cluster. The overall manufacturing declined 0.5 pct y/y in March 2016. However, excluding the biomedical cluster, output would have contracted by 5.5 pct.
“So, it remains to be seen whether the biomed cluster will come to the rescue again. Even if it does, it adds nothing to the economy except to the headline figures given that it is the least integrated industry,” DBS said in a research note.
The material has been provided by InstaForex Company – www.instaforex.com