Singapore February industrial output dips slightly

Singapore's industrial output dipped slightly more than expected in February and could slow further in coming months after a massive earthquake and tsunami in Japan, one of the city-state's biggest export markets. The disaster could both reduce Japanese demand for products made in Singapore and leave Singaporean companies, particularly electronics makers, vulnerable to shortages of parts or key components usually imported from Japan to make finished goods.
Singapore's Economic Development Board said industrial production fell 2 percent in February from January on a seasonally adjusted basis, slightly more than the median forecast of a 1.7 percent contraction in a Thomson Reuters poll. The Southeast Asian country's industrial production rose 4.8 percent in February from a year ago, below the 6 percent forecast of economists and the 11 percent expansion recorded in January due weakness in pharmaceuticals.
"Biomedical so far this year is doing a reverse of 2010. In first quarter 2010, it was a big contributor to headline growth, this time around it's a bit of a drag," said Song Seng Wun, Singapore-based senior economist for Malaysia's CIMB. "We expect biomed's contribution to be more meaningful in the second half, when ramp-up in new capacity is going to be adding to rather than subtracting from growth," he added.
Song and other economists warned Singapore's exports and manufacturing output for March and subsequent months could be slowed by supply disruptions arising from disaster which struck north-east Japan on March 11. "Singapore's manufacturing may be more severely impacted in the coming months, as Japan's earthquake is having a larger negative impact than originally thought," said Bank of America Merrill Lynch economist Chua Hak Bin.
"Japan is Singapore's seventh largest export market, accounting for 4.6 percent of exports. But this may understate the impact, as about 37.5 percent of Singapore's exports are electronics, which is sensitive to disruptions to the tech supply chain," he added.
Supply chain disruptions in Japan have forced at least one global automaker to delay the launch of two new models and are forcing other industries to cut back production or shutter their plants while they seek parts or components elsewhere.