SINGAPORE, Jan 25: Singapore’s industrial output in December nearly matched the year-earlier level as higher production of drugs and oil rigs offset continued weakness in electronics, easing fears that fourth quarter gross domestic product data would be revised downwards.
The Economic Development Board (EDB) said on Friday industrial production slipped 0.6 percent in December from a year ago as a 21.0 percent jump in pharmaceuticals and a 14.8 percent rise in marine and offshore engineering offset a 16.9 percent year-on-year drop in electronics.
However, the drop in electronics was the worst year-on-year performance since January 2012, said CIMB regional economist Song Seng Wun.
‘There was a late burst of activity in pharma and rigs. We didn’t see this in the trade numbers and it could be because of the reporting lag between production and exports,’ he said.
Assuming there were no changes to services and construction, detailed GDP numbers will likely be in line with advanced estimates showing Singapore’s GDP expanded by an annualised 1.8 percent in the fourth quarter from the third quarter after seasonal adjustments, he added.
According to a Reuters poll, economists had expected the government to report a 4.3 percent year-on-year fall in December industrial production.
Singapore’s industrial production gained 5.4 percent in December from November after seasonal adjustments, beating the poll’s median estimate of a rise of 0.2 percent.
For all of 2012, production was 0.1 percent higher than in 2011.
Most economists have predicted a downward adjustment in the GDP growth number following the publication of much-weaker-than-expected December export data.
The detailed fourth quarter GDP report is expected to be released in the week ending Feb. 22.
The government has said Singapore grew 1.2 percent in 2012, compared with 4.9 percent the previous year.
Singapore exports most of what it produces and manufacturing accounts for about one-quarter of its GDP.
The weakness in Singapore’s exports and industrial production has been due mainly to electronics, whose output contracted 11.3 percent for the whole of 2012.
REGIONAL ELECTRONICS UNDERPERFORMER?
Credit Suisse, in a report this week, said Singapore’s electronics exports have underperformed the region in recent years due to their greater reliance on slower growing industries such as hard disks and personal computers. In contrast, Taiwan and South Korea are plugged into the fast-growing market for smart phones and computer tablets.
The strong Singapore dollar has also hurt manufacturers, Credit Suisse said.
EDB, however, said export values did not accurately reflect the strength of Singapore’s electronics sector.
‘As manufacturing activities in our electronics industry shifts from the production of finished or semi-finished products towards the making of components, the export value of each product that is manufactured here decreases,’ said EDB’s deputy director for electronics Terence Gan.
The drop in export values does not, therefore, correspond to a fall in value-added, he said.
Electronics continues to account for the biggest share of fixed asset investments in Singapore, and companies such as Qualcomm, Applied Materials and STATS ChipPAC have made recent investments to boost manufacturing as well as research and development, Gan added in response to queries. (AGENCIES)
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