Monday, May 29, 2017

IPI Slowed In April, Dragged By Pharmaceuticals

Economic Research
29 May 2017

Economic Update

Singapore’s IPI growth decelerated to 6.7% YoY in April, driven by a sharp plunge in output from the biomedical manufacturing and domestic oriented industries. Meanwhile, production of electronics picked up, cushioning some of the downside. Excluding biomedical manufacturing, the IPI expanded 15.5% YoY in April, picking up from a 13.5% rise the month before.
The slowdown is not alarming as the IPI had been expanding strongly since late last year, and the low base effect has faded. We maintain our forecast for manufacturing output to grow 4% in 2017, compared to +3.6% last year, underpinned by:
    i.   Overall higher semiconductor production: demand is set to pick up again in 2H ahead of the new iPhone launch;
   ii.   Firming US economic growth and the receding risk of an EU break-up, which is set to reignite the global capex cycle – which would support machinery exports;
  iii.   An improving global outlook, which would also lead to rising demand for petrochemicals and oil & gas production.

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