Singapore: Poor prospects for the industrial sector – UOB

Barnabas Gan, Economist at UOB Group, reviewed the recent results from the industrial sector in Singapore.

Key Quotes

“Singapore’s industrial production disappointed market expectations with an 8.4% y/y contraction (+1.6% m/m sa) in July 2020, marking the third straight month of negative growth.”

“The downside surprise came from the contraction in biomedical manufacturing, which fell 24.8% y/y in July 2020. Transport engineering also contracted 37.4% y/y, marking the fourth month of negative print as the industry grapple with low oil prices.”

“The fall in biomedical production may be transient, owing to the likelihood for continued demand for biomedical products for the rest of 2020. Separately, low oil prices expected for the rest of 2020 will likely depress the chemicals and transport engineering clusters.”

“We maintain our view that industrial production will contract by 2.0% in 2020. Risks arising from COVID-19 amid trade headwinds are formidable drags to Singapore’s overall manufacturing environment.”