United Overseas Bank’s (UOB) Jester Koh highlights that Singapore’s industrial production rose strongly in March, lifting estimated 1Q26 GDP growth. Koh stresses that robust electronics and semiconductor output, supported by AI-related demand, is cushioning weakness in chemicals, especially petroleum and petrochemicals, where feedstock disruptions and regional refinery run cuts point to intensifying headwinds in coming months.

Electronics resilience versus petrochemical weakness

"Singapore’s industrial production (IP) strengthened 4.7% m/m sa and 10.1% y/y in Mar (Feb: −1.2% m/m sa and 3.3% y/y), with 1Q26 manufacturing growth coming in at a strong 7.9% y/y, above the 5.0% y/y posted in the advance estimates (AE). Assuming construction and services activity remained unchanged from the AE, this implies a likely upward revision to 1Q26 GDP growth to around 5.2% y/y, from 4.6% in the AE."

"On a m/m sa basis, the strong outturn was led by a 5.7% m/m sa increase in electronics (Feb: 5.1%) and a 21.8% m/m sa jump in precision engineering (Feb:-13.3%), with the former led by semiconductor segments on the back of robust AI-related demand while the latter reflected higher output of optical instruments, electronic connectors, metal precision components, etc while machinery and systems saw higher production of semiconductor equipment."

"The most striking observation in the Mar IP release was the -18.5% m/m sa plunge in chemicals (Feb: -1.8%), led by petrol (Mar: -13.4%, Feb: -12.5%) and petrochemicals (Mar: -23.9%, Feb: -8.1%) with the EDB release attributing it to “disruptions in feedstock supply”, while news sources have already reported a growing number of refineries and petrochemical companies in Asia cutting runs and some have even declared force majeure"

"Key Takeaway from Mar IP: Headwinds in the petrochemicals segment could intensify in the months ahead as refineries draw down their limited feedstock inventories. Nevertheless, overall IP could continue to hold up, cushioned by strong electronics and semiconductor output amid AI-related tailwinds."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)