SINGAPORE (Oct 26): Maybank Kim Eng is raising Singapore’s 2017 GDP growth forecast to 3.4% from 3.2% with final 3Q GDP growth likely to come in at 5.1%, above the government’s earlier flash estimate of 4.6%.

“Our upgrade takes into account stronger 3Q manufacturing as well as better services growth. We think that growth is visibly broadening to services and more domestic-oriented sectors. We also reiterate our view that the Ministry of Trade & Industry will likely upgrade its full year GDP growth to 3.0% to 3.5% from current 2% to 3% when the finalised 3Q GDP is released in mid-Nov,” says lead analyst Chua Hak Bin in a report.

“We maintain our view that MAS will likely normalise policy and shift to a “slight appreciation bias” at the April 2018 meeting.

MTI had earlier reported that Industrial production (IP) continued to expand strongly in September, hitting a historical high in level terms, powered by electronics. IP grew 14.6% in Sept from a year ago vs 19.5% in August, while IP ex-biomed surged by 16.1% vs 18.2% in Aug.

This brings manufacturing growth to 18.4% in 3Q17, well exceeding the government’s flash estimate of 15.5%.

Electronics surged by 33% in Sept vs 39% in Aug to reach a new record high. Semiconductors, up 46%, remained the key driver, while computer peripherals, up 26%, strengthened from Aug and other electronic components rose 4.8%, recovering after two months of contraction. Data storage rose 24% and consumer electronics however declined 7%.

Precision engineering strengthened to 15% vs 11% in Aug as machinery and systems rose 10% and precision modules & components rose 24%. Chemicals also surged 9.5% vs 1.6% in Aug with all segments posting an increase. The biomedical cluster continued to expand by 8% vs 25% on the back of both pharmaceuticals and medical technology. General manufacturing rose 4.3% after the 0.7% fall in Aug, mainly supported by the food, beverages and tobacco segment. Transport engineering was the only drag on growth, contracting 11% in Sept after three straight months of growth as the decline in land transport and marine and offshore offset the rise in aerospace.