Analysts see steady growth in manufacturing for 2025

Singapore’s industrial production rose 9.1% YoY in January.

Analysts remain cautiously optimistic about Singapore’s manufacturing sector in 2025, highlighting risks related to global trade policies and external economic conditions.

UOB economists noted that Singapore’s industrial production (IP) rose 9.1% YoY in January, driven by semiconductors (+17.9%) and pharmaceuticals (+33.6%).

They expect biomedical output to grow in 2025, reversing a -12.5% contraction in 2024, as Singapore continues to secure high-quality investments in biopharma, medical technology, and precision medicine industries.

However, UOB cautioned that the second half of 2025 could see a slowdown, citing the peaking of electronics exports in South Korea and Taiwan in Q3 2024.

“Whilst manufacturing should continue to benefit in early 2025 from front-loading in anticipation of further escalation in tariffs, there is likely to be some payback towards the latter half of this year, compounded by less favourable base effects, which could translate to weaker y/y IP readings in 2H25,” UOB said​.

RHB acting group chief economist Barnabas Gan echoed a similar sentiment, maintaining a 3% full-year IP growth forecast. He emphasised that the electronics sector remains a key driver, with semiconductor demand supporting Singapore’s trade outlook.

“We expect the manufacturing sector to continue driving the economy, particularly electronics over the medium term. We are particularly optimistic about growth in sectors such as electronics, precision engineering, and transport engineering, which are closely tied to global trade,” Gan stated​.

Both UOB and RHB flagged US trade protectionism and geopolitical risks as key downside factors for Singapore’s manufacturing outlook. UOB noted that Singapore’s electronics exports have likely peaked in Q4 2024, raising concerns about a potential slowdown.

“Furthermore, the electronics exports cycle in both South Korea and Taiwan, which serves as a bellwether for the region, has peaked in 3Q24 and, in our view, Singapore’s electronics NODX growth has similarly peaked in late 4Q24, although we require a couple more readings to be more certain,” UOB said​.

Despite the risks, RHB remains optimistic about medium-term growth in electronics, precision engineering, and transport engineering, citing continued demand for semiconductor chips in PCs, smartphones, and data centres. “

Today’s IP print reinforces our view, with the key electronics sector expanding by 18.9% YoY, compared to December’s 3.1% YoY growth. We observed strong expansion in key electronics sub-clusters, such as semiconductors, computer peripherals & data storage, and infocomm,” RHB noted​.

UOB further cautioned that whilst the manufacturing purchasing managers' index remains in expansion mode, the momentum could be seasonal, with potential volatility in exports and production cycles later in the year.

“We need a few more data points to confirm whether Singapore’s electronics growth has peaked or if there is room for further expansion,” UOB said​.