MIDF Investment Bank reported today (June 25) that Singapore’s manufacturing sector posted a surprising turnaround in May, driven by a robust recovery in the electronics industry. The overall manufacturing output increased by 2.9% year-on-year, defying expectations after a revised decline of 1.2% in April and a significant 9.2% contraction in March.
Singapore’s Industrial Production Index (IPI) saw a notable year-on-year increase of 2.9% in May 2024, a marked improvement from the 1.2% decline in April. This sharp recovery was largely driven by substantial growth in the electronics sector, which surged by 20.1% year-on-year in May, contrasting with the 1.1% decline observed in April.
The electronics sector’s rise was particularly significant in the production of semiconductors, which grew by 20.6% year-on-year, and the computer peripherals and data storage subsegments, which saw an impressive 24.9% increase. Excluding the biomedical manufacturing sector, Singapore’s IPI growth was even more pronounced at 10.1% year-on-year, compared to a 1.9% increase in April. However, the biomedical sector experienced a steeper decline, with output falling by 42.6% year-on-year in May, following a 27.7% drop in April.
MIDF highlighted that this positive trend in IPI and the strong performance in electronics and electrical (E&E) production align with the double-digit growth seen in Singapore’s exports of personal computers and integrated circuits. The uptick in Singapore’s IPI suggests that regional trade is on a recovery trajectory. Other economies in the region, such as Taiwan and South Korea, have also reported positive export growth since the end of last year, reflecting the recovery in global E&E trade.
MIDF anticipates that the resurgence in E&E trade will be a crucial factor supporting the recovery of Malaysia’s exports this year. The improved demand for electronic components and devices globally is expected to drive further growth in the sector, benefiting regional economies.
