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Singapore's industrial output expands faster than expected

Singapore's manufacturing output expanded at a faster-than-expected pace in December, boosted mostly by strong growth in the electronics sector.

SINGAPORE: Singapore's manufacturing output expanded at a faster-than-expected pace in December, boosted mostly by strong growth in the electronics sector.

According to the latest figures from the Singapore Economic Development Board (EDB), Singapore's industrial production grew 6.2 per cent in December on-year, bucking economists' earlier estimate of a drop of 1.4 per cent.

Joey Chew, an economist at Barclays, said: "This would lead to a revision in the advanced estimate of GDP. We could possibly see Singapore escape an outright contraction last quarter, and the full-year GDP growth might come closer to 4 per cent for 2013."

The government had earlier estimated that full-year GDP would come in at 3.7 per cent last year. 

Meanwhile, excluding biomedical engineering, output increased 12.1 per cent.

The electronics cluster's output grew 22.2 per cent on-year, more than double November's output growth of 11 per cent, led by gains in the data storage and semiconductor segments.

Output of the transport engineering output rose 13.8 per cent, led mainly by a 19.8 per cent jump from the marine and offshore engineering segment.

Chemicals output increased 6.4 per cent on-year.

But output of the biomedical manufacturing cluster fell 14.9 per cent on-year in December, mainly due to a 21.2 per cent decline in the pharmaceuticals segment resulting from a different mix of active pharmaceutical ingredients produced.

Looking ahead, some economists expressed concern over the relatively weak performance in semiconductors compared to other electronics segments.

Mr Chew said: "Given that the key electronics industry -- which is semiconductors -- remains a little bit more sluggish, I would say this isn't a very good indication of a strong turnaround yet, but that said, I think the cyclical in the electronics industry should do better as the US economy improves, so I think the outlook for this year is positive."

Economists also expect domestic challenges to weigh on local manufacturers.

Jeff Ng, economist for Southeast Asia and global research at Standard Chartered Bank, said: "The more domestically-driven sectors will face greater headwinds arising from the tight labour market and continued restructuring, whereas externally-driven ones will face more tailwinds in terms of having better demand, growing faster than domestically-driven ones this year."

Going into the first quarter of 2014, some economists expect the biomedical and chemicals segments to continue to drive the growth in industrial production. 

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