Electronics sector boosts Singapore's industrial production: Moody's Analytics

But HSBC Global Research has a different take on the drivers for growing industrial production.

Singapore’s industrial production grew 8.6% YoY in January with strong support from the electronics sector, according to Moody’s Analytics.

Moody’s Analytics said that almost 20% YoY surge of the electronics sector comes on the back of a heightened demand for semiconductors due to a global shortage in the automobile sector.

“Together with heightened demand from 5G markets and cloud services, the electronics boom will carry the manufacturing sector in the first quarter of the year,” Moody’s Analytics said.

HSBC Global Research economist Yun Liu agreed that the electronics sector was supported by elevated demand for automotive chips and 5G rollout in addition to strong demand for semiconductors.

However, Liu countered that electronics saw a pullback in its strong momentum, falling 9% MoM. She added that the almost 20% YoY growth that the sector saw was due to its relatively low base last year.

Liu said that the growth in Singapore’s IP was supported strongly by rebound in pharmaceutical production which saw a jump of 85.4% MoM after falling sequentially in December.

“On a MoM basis, this was led by impressive growth in pharmaceuticals. However, on a YoY basis, this was almost entirely thanks to ongoing strength in semiconductors. Yes, base effects are partly playing a role, but it’s not because of “conventional” Lunar New Year distortions. Rather, electronics production was in a relatively weaker position in 1Q20, but pharma came from a high base during the same period,” Liu added.

Both analysts agreed that Singapore’s strong manufacturing growth is expected to support the economic rebound into 2021, with the manufacturing sector seto to expand firmly in the year whilst serving as bedrock to Singapore’s growth.

Liu predicts that the Singapore economy will grow by 6.5% in 2021, one of the fastest pace in the region.