Singapore’s manufacturing sector is projecting a positive outlook for the period from October 2026 to March 2027, buoyed by strong global demand for AI-related products. According to the Singapore Economic Development Board, a net weighted balance of 24% of manufacturers expect improved business conditions, with 29% of firms forecasting better prospects and only 5% predicting a downturn.
The precision engineering cluster leads the optimism, supported by semiconductor-related equipment firms anticipating continued global investment in AI. The electronics cluster also expects robust growth, driven by strong orders for semiconductors used in AI applications. In contrast, the chemicals cluster remains cautious, with concerns over crude oil supply affecting the petroleum segment.
Output forecasts for the fourth quarter of 2026 indicate a net weighted balance of 34% of manufacturing firms expecting increased production compared to the previous quarter. The electronics and precision engineering clusters are set to see higher output, particularly in semiconductors and data storage products, catering to the demand from AI data centres.
Employment levels are expected to remain stable, with 72% of firms projecting no significant changes. However, the biomedical manufacturing and transport engineering clusters anticipate a larger workforce.
Despite the positive outlook, 23% of firms foresee challenges in securing export orders, citing price competition and geopolitical factors as key concerns. As Singapore’s manufacturing sector navigates these challenges, the focus remains on leveraging AI demand to drive growth.
