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MANUFACTURING | Staff Reporter, Singapore

US-China trade war could hurt manufacturing growth in Q3

Electronics will continue easing down amidst stagnation of demand for semiconductors.

The US-China trade spat could pose an additional risks to the already slowing down growth in Singapore’s manufacturing sector, CGS-CIMB and OCBC Investment Research (OIR) said.

“The headwind of course remains the possibility of an escalation in US-Sino trade war, with potential spillovers into emerging markets including Asia,” OIR explained. “In particular, the US’ tariffs on the next US$200b tranche for Chinese imports could kick in Q4 2018 after the public comment period ends on 5 September.”

For RHB, July’s slowdown commenced the weaker Q3 for the manufacturing sector.

“The electronics sector, in particular, continues to moderate in light of softer growth in the electronics industry,” they noted. “This is because there is a lack of new smartphone models and as consumers shift away from the use of computers and data storage mediums.”

Also read: Unsustainable growth in manufacturing could hit Singapore's GDP

The segment could experience more easing down by late 2018 with the stagnation of the global demand for semiconductors which make up 62% of the sector’s production, RHB noted.

Despite this, RHB is positive with its expectation that offshore marine activities could recover to offset the cool down in electronics through higher output in oil & gas field equipment and shipbuilding & repair jobs with the upward trend in energy prices.

Singapore’s manufacturing output eased down to a 6% YoY growth in July which is a slip from June’s 8% YoY growth, according to the Economic Development Board. It was mainly buoyed by the 10.1% output expansion in biomedical manufacturing.

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