June IPI Surges As Underperformers Rebound

Economic Research	27 July 2017
Singapore
Economic Update
June IPI Surges As Underperformers Rebound Singapore’s IPI jumped 13.1% YoY in June (May: +4.4%), driven by a rebound in the pharmaceutical and transport engineering sectors. Meanwhile, semiconductor and precision engineering output slowed, which capped some of the upside. The Industrial Production Index (IPI) expanded 8.1% YoY in 2Q, slowing from +8.5% in the first three months of the year. Weaknesses in the biomedical manufacturing and general manufacturing industries (GMI) sectors dragged on the headline index, whereas electronics and chemical production picked up – this cushioned some of the slowdown. Going forward, we envisage for the IPI growth to lose some momentum, undermined by slower export growth and a fading low base effect. Semiconductor production is set to grow at a softer, albeit still robust pace, while pharmaceutical output is expected to remain weak due to expiring patents. We retain our forecast for manufacturing output to gain 6.1% this year, compared to +3.6% in 2016. Economist:  Ng Kee Chou | +603 92802179