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It’s high time to overhaul Singapore’s manufacturing sector: DBS
It will remain in recession in coming quarters.
Singapore needs to do something—fast—if it wants to rescue its struggling manufacturing sector from the unyielding grip of recession.
Once considered a bastion of growth, the city-state's manufacturing sector has been in recession for the past four quarters. The sector contracted by 6.2% in the third quarter, bringing its overall decline for the past four quarters to 3.7%.
The sector’s share of overall GDP has dropped from 26% in 2004- 06 to just 17% in 2013-2014.
Further, industrial production has booked eight consecutive months of contraction this year. Singapore IP is expected to drop 3.2% year-on-year in October when official data are released today.
“Beyond the cyclical drag, the manufacturing is weighed down by structural challenges. External competition, continued increased business costs and manpower shortage are eroding the longer term prospects of the sector. It’s time for policymakers to intensify their efforts to promote growth in this sector,” said DBS.
“Manufacturing has always been an important engine for the Singapore economy and the nation wouldn’t have achieved today’s success if not for the tremendous progress made in this area. However, at the current pace of decline in the GDP share of the manufacturing sector, Singapore could well follow the path of Hong Kong in this regards eventually,” DBS warned.
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