Singapore manufacturing sector rose 7.3% YoY in 2020

This comes after the sector expanded by 14.3% YoY in December.

The Singapore manufacturing sector was better than expected in December as it was up 14.3% YoY, bringing the full-year growth to 7.3% YoY in 2020, according to a report by OCBC Treasury Research.

“The fortuitous combination of work-from-home arrangements, accelerated adoption of digital and e-commerce platforms, and global semiconductor demand to support 5G products and solutions, amongst others, amidst the global lockdown period was essentially a life-saver,” the report stated.

Excluding biomedical outputs, industrial production also surged for the second consecutive month by 19.8% YoY.

The electronics cluster grew the most by 41.8% YoY over the same period, led by a 51% rise in semiconductors due to 5G demand and a low base from a year ago.

Meanwhile, the biomedical manufacturing cluster remained volatile as its December output contracted 13.2% YoY due to lower production of biological products, but for the full year it still recorded a 23.7% YoY growth for the cluster.

The transport engineering cluster also contracted 31.5% YoY in December due to a 30.8% decline in marine & offshore engineering, and a 41.8% decline in aerospace segments. This is expected to persist.

According to the report, however, the base effects will not be so favourable looking ahead and 2021 manufacturing growth may moderate to around 3 to 4% YoY.

Whilst electronics and precision engineering clusters may continue to benefit from the above drivers and ongoing global supply chain shifts, the aerospace and marine & offshore segments may remain muted for a prolonged period of time given that international borders remain closed and the oil and gas market remains soft.