As a year weighed down by the coronavirus pandemic drew to a close, Singapore’s manufacturing industry rebounded last month, partly because the pharmaceutical segment grasped the opportunities created by the outbreak.
Semiconductors also turned in a strong performance.
Despite the Republic weathering its worst recession since independence, manufacturing has been a rare picture of resilience this year, and is riding the demand arising from the pandemic and 5G markets.
Factory output beat analysts’ expectations and expanded 17.9 per cent year on year, reversing the 0.8 per cent decline seen the previous month, according to data released by the Economic Development Board yesterday.
Economists polled by Bloomberg had forecast a 14.1 per cent jump.
Analysts said the sector is likely to end the year on a positive note, with over 6 per cent growth.
Maybank Kim Eng senior economist Chua Hak Bin said the manufacturing sector has been “remarkably resilient” this year, unlike previous recessions, where it had been a major casualty.
It is likely to continue the third quarter’s 10 per cent growth into the fourth quarter, he added.
The volatile biomedical cluster, which has been one of the best-performing this year, recorded a 40.6 per cent jump in output last month compared with the same period a year ago, with the pandemic continuing to drive demand for pharmaceuticals and medical equipment.
Ms Selena Ling, OCBC Bank’s head of treasury research and strategy, said: “Biomedical manufacturing is definitely the shining star for now, with the pandemic driving global demand for test kits, vaccines and other related paraphernalia in the short term.”
The pharmaceuticals segment surged 50.8 per cent last month, on the back of higher production of active pharmaceutical ingredients and biological products.
The medical technology segment also went up, by 22.7 per cent, due to higher export demand for medical devices. Singapore produces a range of medical technology products such as implantable pacemakers and contact lenses.
The biomedical cluster has expanded 26.1 per cent year on year between January and last month.
Dr Chua said that with continued strong demand for vaccines in the coming year and Singapore’s possible role in producing them, the pharma segment could see sustained growth.
The key electronics sector surged 34.9 per cent year on year last month, with all segments recording growth in output, apart from infocomms and consumer electronics. In particular, the semiconductor segment expanded by 40.9 per cent on the back of demand from 5G markets and a low production base a year ago.
However, the transport engineering cluster saw a contraction in output.
Ms Ling noted that the manufacturing industry is likely to see low single-digit growth in the coming year. “Going into 2021, given that the sector had expanded 6.5 per cent for the first 11 months of the year, it may be realistic to expect some moderation in growth momentum.”
Agreeing, Dr Chua said: “Given the manufacturing growth this year, recovery in 2021 would have to be more dependent on the service sector, which will, in turn, depend on vaccinations and the lifting of travel restrictions.”
Correction note: An earlier version of the article misquoted Dr Chua as saying the manufacturing sector’s 2 per cent growth in the third quarter would be continued in the fourth quarter. He said that its 10 per cent growth would be continued. We are sorry for the error.
