Manufacturing growth to slow down after boosted Q1 results: analysts

In Q1, the sector posted an above-estimate growth of 7.1%.

The manufacturing sector will likely see a slower upturn in the remaining quarters of the year after posting an above-estimate growth of 7.1% in Q1, according to analysts.

In a report, Maybank said manufacturing growth will ease to a low single-digit pace because chip production is operating near full capacity and on high base effects.

Both Maybank and OCBC Treasury Research also cited China's lockdown as a factor that will likely dampen global manufacturing and trade with the latter saying its effects "may spill over into the regional manufacturing supply chains from April onwards."

Weaker EU growth and rising energy prices might also affect manufacturing growth, added Maybank.

On the brighter side, UOB said Singapore's closer return to normalcy will "certainly" have a positive impact on the city-state's manufacturing outlook.

"We keep to our view that Singapore’s manufacturing prognosis remains favourable for the year ahead. The recovery especially in the transport engineering sector has been exceptionally encouraging, and may stay supported by the gradual reopening of international borders," UOB said.

"Moreover, the global economic momentum into 2022 is likely to support other growth-related industries such as general manufacturing, chemicals, electronics, and precision engineering," UOB added.

Taking into account these factors, UOB said full-year manufacturing growth will likely grow by an average of 4.0% in 2022, whilst OCBC retained its 3.5% YoY forecast but said there could be some upside to the forecast "should the Ukraine war uncertainties and China-related supply chain bottlenecks resolve sooner rather than later."

Meanwhile, the three analysts also expect Q122 GDP to likely be revised higher to around 3.6% to 3.7% YoY following the higher-than-expected manufacturing growth for the first quarter.

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Maybank

OCBC Treasury Research

UOB

Singapore manufacturing report

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