Singapore GDP likely to rise in near term following strength in biomedical, electronics sector

The economic growth of Singapore is expected to rise in the near term, tracking strength in the country’s biomedical and electronics sectors. Nonetheless, the surge in September industrial production is likely to certainly bring about an upward revision in the Q3 gross domestic product (GDP) figures.

The headline production figure for September surprised on the upside with a stellar 6.7 percent expansion, led by both biomedical and the electronics clusters. This is perhaps the brightest spark in a long string of poor economic data over the past months.

The biomedical cluster surged 22.2 percent y/y in the month. Excluding biomedical, overall manufacturing production posted a slower expansion of 3.5 percent. In addition, the electronics sector recorded an expansion of 15.9 percent in the month.

Moreover, positive wealth effects from the run-up in China’s property market may have also contributed to better electronics exports. However, that is mainly driven by higher consumer leverage rather than real income growth.

"The headline GDP growth should be lifted to 1.1 percent y/y, up from 0.6 percent in the earlier projection. Sequentially, it will imply a less severe decline of about -2.0 percent q/q saar, against the previous estimate of -4.1 percent," DBS commented in its latest research report.