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Will SG’s manufacturing momentum improve in 2H23? 

Manufacturing output contracted anew in July, by 10.8% YoY.

Despite the “worse-than-estimates” industrial production (IP) in July and eight consecutive months of decline, an expert still believes that Singapore’s manufacturing momentum will improve in the second half of the year, particularly in the fourth quarter.

“Notwithstanding the negative rhetoric adopted thus far, we notice that non-oil domestic exports (NODX) and industrial production index (IPI) momentum has improved in recent months,” RHB Senior Economist, Barnabas Gan, said.

“The expected recovery of global trade dynamics, especially in 2H23, should lift export-oriented ASEAN economies, including Singapore,” the expert added.

Gan, however, underscored that he still expects a contraction in the IP print until Q3.

“Singapore remains a trade-reliant economy, and the continued weakness in trade dynamics may discourage manufacturing activities into the third quarter of this year,” Gan said.

For the whole year, Gan expects the manufacturing output to grow by 0% to 2%.

Meanwhile, Alvin Liew, UOB’s senior economist, believes the IP print will likely contract by 5.4% in 2023, saying that worsening electronics downcycle and weaker external demand has yet to “find a bottom in the current cycle yet.”

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