Singapore’s manufacturing output rose faster than expected because of robust growth in electronics and pharmaceuticals, and may help the island nation’s economy expand by at least 10% this year.

Manufacturing output grew 43% in March, accelerating from a downwardly revised 17.9% expansion in February, according to data released by the Economic Development Board Monday. A Dow Jones Newswires poll of seven economists had tipped industrial production to grow 30.3%.

“The March manufacturing data, coupled with the export numbers for the same month has established a strong base for a strong second quarter and there may now be a greater chance of a double-digit growth this year,” Robert Prior-Wandesforde, an economist with HSBC Bank, said after the data were released. “It’s, however, not of much relevance to the central bank.”

The Monetary Authority of Singapore tightened monetary policy aggressively on April 14 and raised its projections for economic growth and inflation this year after gross domestic product soared 32.1% in the quarter ended March 31 from the previous three months in annualized, adjusted terms, the fastest pace on record going back to 1975. That compared with a 2.8% contraction in the fourth quarter of last year.

The island nation’s government now expects the economy to grow between 7% and 9% this year while inflation may range between 2.5% and 3.5%.

Electronics, Pharmaceuticals lead
Electronics output surged 73.8% from a year earlier after rising 55.5% in February due to higher export demand and weak comparative numbers, the data show. Among electronics, output of semiconductors rose 96.6% while consumer electronics production grew 22% on year.

“Global electronics demand has rebounded strongly and that, in turn, is supporting export-dependant regional economies,” said David Cohen of Action Economics. “This is one more sign that global recovery is continuing and may prompt other Asian central banks such as Taiwan and Indonesia to join the crowd and tighten policy.”

Australia, Malaysia, and India have started to hike interest rates. Others, including China and the Philippines, are moving to soak up excess liquidity in banking systems that analysts say is starting to light a fire under real estate and other asset prices.

Output from Singapore’s biomedical sector rose 65.1% in March due to a 69.9% rise in pharmaceuticals output on higher production of ingredients that go into drugs.

Singapore’s pharmaceuticals sector is dominated by a small number of firms, and output can vary significantly when plants change product lineups or close for maintenance.

Manufacturing output, excluding the biomedical sector, increased by 36.2%. Still, production from the transport engineering sector fell 13.5% due to weaker output in the aerospace and marine and offshore segments.

Seasonally adjusted manufacturing output fell less than expected, contracting 1.5% from a month earlier, compared with a revised 5.2% rise in February. The median forecast of economists was for a 7.9% decrease in seasonally adjusted terms in March.