WEBVTT - Could things get more grim for Singapore's manufacturing sector? 0:00:00.629 --> 0:00:04.389 It's a Singapore today top story with Lance and Daniel. 0:00:05.059 --> 0:00:08.680 It sure is. The Singapore PMI is a key barometer 0:00:08.680 --> 0:00:13.489 of the manufacturing sector in Singapore. Reading above 50 indicates 0:00:13.489 --> 0:00:17.559 that the factory activity is generally expanding and below 50%, 0:00:17.770 --> 0:00:21.000 it means that the activity is on the decline. 0:00:21.610 --> 0:00:24.170 OK, so what we're seeing is last month, our PMI 0:00:24.170 --> 0:00:29.500 edged down to 50.7%. That's the lowest in 7 months. 0:00:29.770 --> 0:00:32.049 The PMI for electronics, which accounts for about a third 0:00:32.049 --> 0:00:33.799 of Singapore's manufacturing activity, 0:00:34.159 --> 0:00:39.638 Declined to 51 from 51.1. Alvin news here, senior economist 0:00:39.639 --> 0:00:41.240 at U will be helping us break down these newly 0:00:41.240 --> 0:00:45.240 announced numbers. Alvin, welcome back. So that's, let's do the math, OK. 0:00:45.319 --> 0:00:48.200 That's a drop of something like 0.2 points from January's 0:00:48.200 --> 0:00:52.668 50.9 points. Still, the readings above 50% generally indicate growth, 0:00:52.680 --> 0:00:55.950 but we're very close to 50. Um, so we're not 0:00:55.950 --> 0:01:00.000 in contraction territory technically speaking, but should we be concerned 0:01:00.000 --> 0:01:00.680 about the slight drop? 0:01:01.500 --> 0:01:04.180 Well, um, of course, you are right that we are 0:01:04.180 --> 0:01:08.370 still in expansion territory but it coming down. So suggest 0:01:08.370 --> 0:01:11.739 somewhat of a easing momentum and we should be looking 0:01:11.739 --> 0:01:14.940 out for that, especially if you mark it against the 0:01:14.940 --> 0:01:18.379 region itself, right? The region also had the PMI numbers 0:01:18.379 --> 0:01:18.860 coming out. 0:01:19.290 --> 0:01:23.009 Ah, yes, uh, just yesterday I believe most of them 0:01:23.010 --> 0:01:28.029 were on the uptrend so that we are slightly on the, the, 0:01:28.040 --> 0:01:30.169 the other side of the equation that we are coming, 0:01:30.569 --> 0:01:31.610 the numbers are easing. 0:01:33.160 --> 0:01:36.819 Alvin Electronics, a big player for Singapore. It accounts for 0:01:36.819 --> 0:01:40.470 about a third of our manufacturing cluster. It had a 0:01:40.470 --> 0:01:45.089 slight dip to 51 points last month from January's 51.1 points. 0:01:45.389 --> 0:01:48.379 So are we still riding that AI wave? 0:01:49.370 --> 0:01:52.309 I think ah I'm not quite sure whether it was 0:01:52.309 --> 0:01:55.339 this program we talked about we did talk about this 0:01:57.589 --> 0:02:00.260 because um of course we know that we don't produce 0:02:00.260 --> 0:02:03.589 the AI chips. That's ah quite clear. Those are the 0:02:03.589 --> 0:02:04.900 productions are elsewhere. 0:02:05.250 --> 0:02:09.100 But ah what we do have is the related functions 0:02:09.100 --> 0:02:11.970 related productions, like, I mean the AI chips we don't produce, 0:02:12.020 --> 0:02:14.850 but those chips need memory, right, and the memory chips, right. 0:02:14.979 --> 0:02:19.020 So the memory chips that are going goes along with that, right, 0:02:20.110 --> 0:02:23.109 is produced by um some of the companies, some of 0:02:23.110 --> 0:02:26.740 the semiconductor companies here. So that's how we are part 0:02:26.740 --> 0:02:29.459 of that wave itself. um to say that we are 0:02:29.460 --> 0:02:33.380 not ah that I believe that the wave is still on. 0:02:33.839 --> 0:02:37.609 But, um, of course, ah there are other variables that 0:02:37.610 --> 0:02:40.570 ah we should ah be also mindful of. Of course, 0:02:40.619 --> 0:02:46.898 there's policy uncertainty that trade, trade developments, especially of the 0:02:46.899 --> 0:02:49.899 news that you you probably have just reported. Those things 0:02:49.899 --> 0:02:54.179 will still be kept in focus and probably some extent 0:02:54.179 --> 0:02:58.179 the uncertainty itself may have kept some parts of manufacturing 0:02:58.179 --> 0:03:01.050 may not be related to AI, but some other parts 0:03:01.050 --> 0:03:02.138 of the manufacturing. 0:03:02.389 --> 0:03:04.610 A bit on the cautious footing. 0:03:06.270 --> 0:03:09.029 I want to understand a little bit more about the 0:03:09.029 --> 0:03:13.619 impact of overcapacity and front loading because of all these 0:03:13.619 --> 0:03:16.869 uncertainties that we're reading about on a daily basis, especially 0:03:16.869 --> 0:03:20.440 for products entering the US starting really to have some 0:03:20.440 --> 0:03:21.630 impact for us. We're feeling the bite. 0:03:22.800 --> 0:03:26.500 Um, unless this is really a forward looking, very, very 0:03:26.500 --> 0:03:30.779 forward looking number, because like the numbers, the the the 0:03:30.779 --> 0:03:34.770 additional tariffs that was literally just announced like less than 0:03:34.770 --> 0:03:39.490 12 hours ago, but this survey is probably covered slightly 0:03:39.660 --> 0:03:42.539 earlier than that. But ah I mean that's true that 0:03:42.539 --> 0:03:43.110 um 0:03:43.490 --> 0:03:46.440 The we have seen, if we, I think well our 0:03:46.440 --> 0:03:49.259 economists have reported that we have seen the peak in 0:03:49.259 --> 0:03:53.820 the electronic cycle somewhere, maybe in the middle of the 0:03:53.820 --> 0:03:57.500 second half of last year, somewhere there and in the 0:03:57.500 --> 0:04:02.300 in the bellwether economies in terms of electronics like uh 0:04:02.300 --> 0:04:06.080 Taiwan and South Korea, it has eased and we thought 0:04:06.080 --> 0:04:09.660 that that would have represented the peak of the cycle 0:04:09.660 --> 0:04:11.660 and it's coming down, um. 0:04:12.020 --> 0:04:17.470 But I guess again this um the trade policies that 0:04:17.470 --> 0:04:21.190 have been announced, everything, these are real and the of 0:04:21.190 --> 0:04:24.869 course the continuous fear is there might be, there will 0:04:24.869 --> 0:04:27.109 be more that is to be announced and that would 0:04:27.109 --> 0:04:30.750 actually have a more serious bearing on how the global 0:04:30.750 --> 0:04:33.769 trade environment would turn out to be in the coming 0:04:33.769 --> 0:04:34.359 to the 0:04:34.959 --> 0:04:38.109 Uh, later half of 2025 itself. OK, Alvin, let's talk 0:04:38.109 --> 0:04:41.619 about these protectionist policies. We know, like you just said, 0:04:41.829 --> 0:04:45.029 12 hours ago, US President Donald Trump said that tariffs 0:04:45.029 --> 0:04:48.029 on Chinese imports and levies on Mexico and Canada will 0:04:48.029 --> 0:04:51.549 go ahead. Some people say, you know, you close one door, 0:04:51.630 --> 0:04:55.390 you end up with maybe another door opening. So will 0:04:55.390 --> 0:04:59.988 that impact us in more negative way or perhaps there's 0:04:59.988 --> 0:05:01.309 some positivity. 0:05:01.779 --> 0:05:04.059 That could come out, come out of this, you know. 0:05:04.220 --> 0:05:06.940 So maybe a mixture of both, or maybe, how can 0:05:06.940 --> 0:05:09.979 we make good on the situation too? 0:05:11.040 --> 0:05:14.669 I think we can take the episode of 2018 as 0:05:14.670 --> 0:05:19.029 an example. So that was a pretty much a straight 0:05:19.029 --> 0:05:23.950 up between US China trade tensions, and with that itself, 0:05:23.988 --> 0:05:28.109 we have seen that the trade or the investments have 0:05:28.109 --> 0:05:32.709 gone to some parts of, especially like in parts of Asia. 0:05:33.059 --> 0:05:36.359 ASEAN and some of the economies have benefited from the 0:05:36.359 --> 0:05:40.390 trade diversion itself and but this time around, this has 0:05:40.390 --> 0:05:44.670 been a more the the trade fight is not. 0:05:45.609 --> 0:05:49.970 Just going to be between US and China, as you 0:05:49.970 --> 0:05:54.089 have seen, it now also involve the allies of Canada 0:05:54.089 --> 0:05:58.529 and Mexico, although they are for different reasons. Fentanyl was 0:05:58.529 --> 0:06:03.440 the basis of the for the the the the imposition 0:06:03.440 --> 0:06:09.409 of those tariffs on Canada and Mexico primarily, but on 0:06:09.410 --> 0:06:13.609 coming through to the 2nd of April where they are 0:06:13.609 --> 0:06:14.238 looking at 0:06:14.519 --> 0:06:18.510 The rest of the world in terms of that, um, 0:06:18.589 --> 0:06:21.669 I think if you look at the countries or economies 0:06:21.670 --> 0:06:25.230 that have a significant trade runs a significant trade surplus 0:06:25.230 --> 0:06:29.308 against the US, right, those countries might be in a 0:06:30.149 --> 0:06:36.130 higher risk of tariffs being slap on their respective economies 0:06:36.549 --> 0:06:39.959 like what we are seeing right now and with that itself. 0:06:40.529 --> 0:06:44.649 Um, then while Singapore may not be directly impacted because 0:06:44.649 --> 0:06:48.250 we run a trade deficit with the US, US exports 0:06:48.250 --> 0:06:51.890 more to us than we export to US, but we 0:06:51.890 --> 0:06:56.919 are a global and trade dependent economy and with anything 0:06:56.920 --> 0:07:00.529 happening to the global trade system itself, right, then we 0:07:00.529 --> 0:07:01.850 will be negatively impacted. 0:07:02.559 --> 0:07:02.920 Mm. 0:07:03.760 --> 0:07:05.488 Looks like you're gonna be tuned into CNA93 for the 0:07:05.488 --> 0:07:07.709 latest updates on all of this regularly. 0:07:08.799 --> 0:07:10.640 I think you have to do it 24/7. 0:07:11.649 --> 0:07:16.170 I think so too. Let, let's build on, OK, let's 0:07:16.170 --> 0:07:18.000 change that, let's change that. Let's start talking about China. 0:07:18.290 --> 0:07:21.799 China's going to hold its two sessions meeting from tomorrow, 0:07:22.089 --> 0:07:24.730 and many are hoping for some kind of huge stimulus 0:07:24.730 --> 0:07:27.500 package at this key parliamentary meeting. They want to see 0:07:27.500 --> 0:07:31.089 stimulation for the economy and trying to maintain that 5% 0:07:31.089 --> 0:07:32.329 growth target for this year as well. 0:07:33.450 --> 0:07:35.200 If little is promised. 0:07:36.070 --> 0:07:38.570 Would that or how would that affect Singapore's top trading partner? 0:07:40.040 --> 0:07:44.440 Well, OK, to be fair, I think policy, our, our 0:07:44.440 --> 0:07:47.890 economists covering China thinks that policy support will be stepped 0:07:47.890 --> 0:07:48.890 up in 2025. 0:07:49.440 --> 0:07:52.230 That's it, I don't think we are expecting a significant 0:07:52.230 --> 0:07:55.549 expansion of stimulus, and I think we are not likely 0:07:55.549 --> 0:07:59.510 to see any major policy surprises being sprung on at 0:07:59.510 --> 0:08:05.989 this latest NPC itself. What we do see is that 0:08:05.989 --> 0:08:09.029 China is expected to have some keeping the emphasis on 0:08:09.029 --> 0:08:11.869 boosting consumer demand, consumer spending. 0:08:12.320 --> 0:08:16.399 Promotion of the private sector, technological innovation to lead the 0:08:16.399 --> 0:08:20.339 development of new productive forces, much like the AI, the 0:08:20.339 --> 0:08:26.149 deep sick as an example and to boost supply chain resilience. 0:08:26.640 --> 0:08:30.359 We are not expecting to see what took place in 0:08:30.359 --> 0:08:35.159 perhaps like 20 2008 whereby there was this huge fiscal 0:08:35.159 --> 0:08:38.080 stimulus that was pushed into the system that is not 0:08:38.080 --> 0:08:39.799 something that I think we are expecting. 0:08:41.138 --> 0:08:44.179 If you look at the EU, you know, it's, it's 0:08:44.179 --> 0:08:45.979 got a good relation. 0:08:47.330 --> 0:08:52.099 Ship with Singapore when it comes to trade and bilateral ties. 0:08:53.469 --> 0:08:57.030 Do you see them pivoting even more towards Asia, wanting 0:08:57.030 --> 0:09:01.150 to trade more towards Asia because they're seeing these issues 0:09:01.150 --> 0:09:03.989 right now with the USA? Could that be of benefit 0:09:03.989 --> 0:09:06.960 to us in a big way? They trade with us, 0:09:07.190 --> 0:09:10.809 we trade with them, and it's win-win for the two sides. 0:09:11.830 --> 0:09:16.090 Definitely in this current environment, you would like to look 0:09:16.090 --> 0:09:19.890 at markets that you can diversify your markets and if 0:09:19.890 --> 0:09:22.570 you want to diversify into markets, you want to be 0:09:22.570 --> 0:09:27.119 diversing your markets first with growth potential and perhaps also 0:09:27.119 --> 0:09:30.880 emerging middle class whereby the purchasing power is 0:09:31.080 --> 0:09:33.840 Ah, has been relatively set up, say, versus like maybe 0:09:33.840 --> 0:09:38.039 1020 years ago. Then in many sorts of those based 0:09:38.039 --> 0:09:41.000 on those criteria, then I think ASEAN will fit the 0:09:41.000 --> 0:09:45.478 bill for ah for the EU to increase our our 0:09:45.479 --> 0:09:48.270 ties and relationships, but at the end of the day, 0:09:48.359 --> 0:09:50.119 if you're talking about replacing 0:09:50.650 --> 0:09:55.369 One growth, the one the demand from one economy as 0:09:55.369 --> 0:09:58.200 big as US right that is really a tall order 0:09:58.200 --> 0:10:02.059 even for ASEAN to fill up. So it is difficult, 0:10:02.130 --> 0:10:05.570 but it's to, I would think that the divers diversification 0:10:05.570 --> 0:10:09.530 the principles would still work, especially like this region we 0:10:09.530 --> 0:10:10.169 are seeing that. 0:10:10.549 --> 0:10:14.500 Uh, the growth, the economic growth in this region itself, 0:10:14.609 --> 0:10:18.650 the growing middle income itself, uh, of the middle income 0:10:18.650 --> 0:10:23.010 segment itself, those are really positive factors that actually will 0:10:23.010 --> 0:10:26.570 promote that kind of trade, uh, for the EU with 0:10:26.570 --> 0:10:30.608 this region, but like again, I mean we can be 0:10:30.609 --> 0:10:34.760 part of the diversification process, but we cannot fully replace 0:10:34.760 --> 0:10:37.969 what is the biggest market for them. 0:10:38.719 --> 0:10:39.989 It seems like we're gonna have to do a lot 0:10:39.989 --> 0:10:42.349 with foreign direct investment flows. How do you think Singapore 0:10:42.349 --> 0:10:43.429 is placed when it comes to that? 0:10:45.140 --> 0:10:49.260 Um, definitely we are, I think we are very positively 0:10:49.260 --> 0:10:53.329 placed for this, but of course, we are, uh, uh, 0:10:53.460 --> 0:10:55.739 I would say that we are a very developed, a 0:10:55.739 --> 0:10:58.489 very mature economy, but then we still see a lot 0:10:58.489 --> 0:11:02.299 more inflows coming here, but those inflows will be, we 0:11:02.299 --> 0:11:04.500 serve as a good center for them to see the 0:11:04.500 --> 0:11:10.200 distribution towards the rest of the economies around the region, 0:11:10.460 --> 0:11:13.140 which actually actually benefits everyone. 0:11:13.460 --> 0:11:17.059 And uh of course, what we see is continue like 0:11:17.229 --> 0:11:20.189 there will still be a lot of uh uh high 0:11:20.190 --> 0:11:24.859 value activities that come here that will stay here, including 0:11:25.309 --> 0:11:29.469 um like I think the regional treasury centers and um 0:11:29.469 --> 0:11:31.979 I think the regional HQs here. 0:11:32.320 --> 0:11:34.579 But uh I think some of the production whereby some 0:11:34.580 --> 0:11:37.218 of these companies are looking for it would still need 0:11:37.219 --> 0:11:41.140 to go for uh places where there will be um 0:11:41.140 --> 0:11:46.939 relatively comparatively cheaper production costs itself. So I think that's 0:11:46.940 --> 0:11:49.419 understandable and I think that kind of flow in terms 0:11:49.419 --> 0:11:53.140 of where the foreign direct investments would would still continue 0:11:53.140 --> 0:11:56.989 and especially in an environment where there's such 0:11:57.549 --> 0:12:01.830 Trade, uh, tensions and developments still ongoing, right? I think 0:12:01.830 --> 0:12:06.280 it it really is quite a strong factor as well 0:12:06.280 --> 0:12:09.380 to see the continued flows of FDI coming into this region. 0:12:09.750 --> 0:12:14.069 Do you think because we know US President Donald Trump 0:12:14.070 --> 0:12:16.718 wants to see a lot of manufacturing returned to the USA. 0:12:17.229 --> 0:12:20.989 He's even said he's gonna put money in to compete 0:12:20.989 --> 0:12:23.549 against Taiwan because we know Taiwan does a lot of 0:12:23.549 --> 0:12:29.260 these semiconductors. So we know America has got huge investments 0:12:29.830 --> 0:12:34.539 here in Singapore. It's more than the investments in China, India, 0:12:34.669 --> 0:12:38.429 South Korea, and Japan. Do we see that as being 0:12:38.429 --> 0:12:42.150 a problem as well? Because if he wants manufacturing to 0:12:42.150 --> 0:12:44.630 return to the US, some of these big companies, could 0:12:44.630 --> 0:12:46.260 they relocate and leave us? 0:12:47.510 --> 0:12:50.609 I think ah what you're referencing to perhaps was the 0:12:50.619 --> 0:12:54.070 the 100 billion that is ah um. 0:12:55.070 --> 0:12:58.909 I, I guess pledge for the investments into ah for 0:12:58.909 --> 0:13:04.070 semiconductors ah from Taiwan into into US. Yeah, that's why 0:13:04.070 --> 0:13:07.340 even today we saw huge drops in some of these 0:13:07.719 --> 0:13:10.130 big firms like TSMC and Nvidia too. 0:13:11.429 --> 0:13:15.919 Yeah, but I'm not quite sure whether the the reasons 0:13:15.919 --> 0:13:19.890 is also is just plainly on that, but of course, um, 0:13:19.979 --> 0:13:24.380 I think we will continue to, I think like building 0:13:24.380 --> 0:13:27.979 on the previous question on the FDI flows, we will 0:13:27.979 --> 0:13:31.099 still see foreign direct investments coming into this region and 0:13:31.099 --> 0:13:34.859 Singapore will definitely be still one of the beneficiaries. The 0:13:34.859 --> 0:13:39.130 problems of that itself, I again, um, they 0:13:39.580 --> 0:13:44.549 I somehow, some it really we are a very diversified, uh, 0:13:44.840 --> 0:13:47.760 we have a very diversified manufacturing base, even though I 0:13:47.760 --> 0:13:50.840 think when we look at it, we have I think 0:13:50.840 --> 0:13:53.679 great strengths in the electronics, but we also have other 0:13:53.679 --> 0:13:58.710 sorts of production which need not necessarily be just ah 0:13:58.710 --> 0:14:04.000 catering to um and the the the interesting point is 0:14:04.000 --> 0:14:05.520 again if we point to the 0:14:05.960 --> 0:14:08.919 Ah, what I made comment earlier, right, is that we 0:14:08.919 --> 0:14:09.880 still run a trade. 0:14:11.140 --> 0:14:16.039 Ah, against the US, so is that still means that 0:14:16.039 --> 0:14:19.320 whatever that we are producing here, right, and we produce 0:14:19.320 --> 0:14:21.479 quite a fair bit of things here, right, they are 0:14:21.479 --> 0:14:23.840 going to a lot of other centers where they are 0:14:23.840 --> 0:14:27.599 served as intermediate goods or final goods itself, ah but 0:14:27.599 --> 0:14:31.719 more more likely to be for further production elsewhere and 0:14:31.719 --> 0:14:35.989 the direct ah the direct chain towards like the US 0:14:35.989 --> 0:14:38.390 itself is not so is. 0:14:39.570 --> 0:14:42.650 As the numbers suggests, it's not as ah. 0:14:44.119 --> 0:14:48.020 or the, the, the, I would say that in as 0:14:48.020 --> 0:14:49.989 a consequence, we don't run that surplus. 0:14:51.390 --> 0:14:54.650 Against the US versus like many of these economies that 0:14:54.650 --> 0:14:58.489 we have mentioned before, such as ah Taiwan in terms 0:14:58.489 --> 0:14:59.890 of their electronics, yeah. 0:15:00.809 --> 0:15:03.210 Alvin, I've just got about a minute left. Give us 0:15:03.210 --> 0:15:06.419 your hot take on how Singapore is forecast a modest 0:15:06.419 --> 0:15:08.909 1 to 3% growth for 2025, which is down from 0:15:08.909 --> 0:15:12.690 the 4.4% GDP growth last year. What's your hot take 0:15:12.690 --> 0:15:14.080 in terms of our GDP outlook? 0:15:15.400 --> 0:15:19.450 OK, I think there's a reasonable outlook from the official 0:15:21.130 --> 0:15:23.500 guide official sources, given that we are going to a 0:15:23.500 --> 0:15:26.710 year that things are a bit more uncertain and as 0:15:26.710 --> 0:15:30.559 the news flow continues, it will likely to look look 0:15:30.559 --> 0:15:35.000 so we have a slight, ah we are slightly on 0:15:35.000 --> 0:15:37.719 the upper band of the the the the forecast range 0:15:37.719 --> 0:15:39.210 we are looking at 2.5%. 0:15:39.520 --> 0:15:42.090 But also clearly that if we were to talk about 0:15:42.090 --> 0:15:44.840 the risk, the risk is on the downside for now 0:15:45.099 --> 0:15:50.179 given the trade developments, but um I think um if 0:15:50.179 --> 0:15:54.219 you look at where building on the budget itself that 0:15:54.219 --> 0:15:57.500 just was announced just a few weeks ago, right, I 0:15:57.500 --> 0:16:01.219 think we see that there is a healthy surplus from 0:16:01.219 --> 0:16:05.340 the government and they, well they have distributed a lot 0:16:05.340 --> 0:16:06.390 of positive. 0:16:06.849 --> 0:16:12.090 Ah, measures in the in the in the current 2015 budget, 0:16:12.270 --> 0:16:15.419 they also have kept a fair amount of ammunition behind. 0:16:15.710 --> 0:16:19.070 So if things do turn, let's say, a more negative 0:16:19.070 --> 0:16:21.630 in the second half, right, we could see them having 0:16:21.630 --> 0:16:25.789 the ammunition left to come up with something a supplementary 0:16:25.789 --> 0:16:29.229 budget to help the economy over that uncertain period. 0:16:30.549 --> 0:16:32.109 Alvin Liu, thank you so much for your time, senior 0:16:32.109 --> 0:16:33.950 economist said you will be joining us for a Singapore 0:16:33.950 --> 0:16:34.630 today top story.