Singapore’s industrial production (IP) in February fell by 7.2% month-on-month, seasonally adjusted, and recorded a year-on-year decline of 0.1%, according to UOB Global Economics and Markets Research. This performance was below the Bloomberg consensus and UOB’s own forecast of a 0.8% monthly decline and a 14.1% annual increase. The January figures were also revised downwards, showing a 2.0% monthly increase and a 12.9% annual rise, compared to previous estimates of 5.3% and 16.6%, respectively.
The February data revealed a broad-based weakness across most sectors. Among the six major sub-clusters, only the electronics sector showed growth, albeit at a reduced pace of 13.7% year-on-year, down from 34.0% in January. This growth was primarily driven by semiconductors, which maintained positive growth due to continued demand related to artificial intelligence, though the pace slowed to 14.6% from 39.7% in January. Other electronics segments, such as info-communications and consumer electronics, also contributed positively.
Conversely, sectors like precision engineering, transport engineering, chemicals, and general manufacturing experienced contractions. The most significant decline was observed in the biomedical sector, which fell by 27.3%, impacted by reduced output in pharmaceuticals and medical technology.
Despite these challenges, UOB maintains its 2026 GDP growth forecast for Singapore at 3.6%. However, the bank notes potential downside risks, particularly if geopolitical tensions involving the US, Israel, and Iran persist, potentially affecting Singapore’s manufacturing sector and related industries. This could lead to adverse effects on external demand and further strain Singapore’s export-driven economy.
