Foreign workforce revival to help manufacturing but risks remain
The reopening of borders will help sustain the overall manufacturing momentum.
Foreign workers could help labour shortage in manufacturing industries but it will not be enough to offset global risks and monetary policy tightening, UOB, said.
In its report, the gradual reopening of borders will aid in sustaining overall manufacturing momentum. As this happens, foreign workforce revival will help the manufacturing sector.
But the manufacturing sector will continue to be obstructed by four external risks such as the Russia-Ukraine unrest, global supply woes, monetary policy tightening stance in economies slowing growth, and new waves of infections or new variants.
The Russia-Ukraine conflict caused high prices in energy whilst the strict China policies added to headwinds for the manufacturing industry.
Meanwhile, the resurgence of infections and the discovery of new variants could prompt restrictions and disruption to the labour supply.
UOB’s reaction stemmed from the recent release of the Economic Development Board's May 2022 overall manufacturing output, which rose by 13.8% year-on-year.
The financial services firm sees that “another dampener to headline growth is higher base levels for the rest of 2022, as industrial production (IP) expanded by double-digit growth rates between May and December 2021, excluding September 2021.
UOB now sees IP growth to be up by 4.5% in 2022 from its previous forecast of 4%.