Electronic boom sets off GDP growth upgrade

AI-related demand and chip supercycle is boosting the industry.

Singapore's electronics manufacturing sector expanded for the 14th consecutive month in July, with its purchasing managers' index reaching its highest level in more than eight years, reinforcing expectations that the government will raise its full-year growth forecast, research by Nomura revealed.

The electronics PMI rose to 52.4 in July from 52.2 in June, remaining firmly above the 50 threshold that separates expansion from contraction. The production sub-index edged up to 52.2 from 52.1, pointing to improving industrial production growth after a moderation in June, driven by sustained momentum in electronics-related segments.

New orders and new export orders both increased further into expansionary territory, whilst stocks of finished goods declined to 49.3 from 49.6. Nomura said the inventory drawdown indicated firms were running down stockpiles in the face of still-robust demand, implying strong electronics production would continue beyond the near term.

Nomura said it continued to flag upside risks to its 2026 GDP growth forecast of 4.6%, which already sits above the consensus estimate of 4%.

Beyond a broadening of AI-related demand and the chip supercycle boosting industrial production, the house said growth would continue to be powered by multiple engines.

Nomura expects the government to raise its 2026 growth forecast to a range of 3% to 5%, up from 2% to 4%, at the final second-quarter GDP release on 11 August.

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