SINGAPORE - Singapore's manufacturing sector expanded by 6.6 per cent year on year in the first quarter of 2020, on the back of increased output in several sectors, especially biomedical production.

This reversed the 2.3 per cent contraction in the fourth quarter of 2019, the Ministry of Trade and Industry (MTI) said on Tuesday (May 27) and marks a turnaround after three straight quarters of contraction.

Singapore's factory production grew by 37.3 per cent on a seasonally-adjusted quarter-on-quarter basis, rebounding from the previous quarter's 5.9 per cent decline.

Factory production growth in the first quarter of the year came despite a 0.7 per cent year-on-year contraction in Singapore's economy, reversing the 1.0 per cent growth in the fourth quarter of 2019.

Among the key drivers of the Republic's manufacturing boost was the pharmaceuticals segment of the biomedical manufacturing cluster, which recorded a surge in the production of active pharmaceutical ingredients and biological products in the first three months of the year, MTI said.

Overall, output for the cluster grew by 49 per cent in the first quarter.

The precision engineering and transport engineering clusters also saw a growth in output, contributing to the growth in the manufacturing sector. A rise in the production of semiconductor equipment, optical products and metal precision components was a key reason for the 21 per cent expansion for the precision engineering cluster in the first quarter of the year.

Growth in these sectors outweighed the decline in several other clusters such as electronics, general manufacturing and chemicals.

In particular, the electronics cluster contracted by 11 per cent in the first quarter, due to overall output declines, due to overall output declines for semiconductors as well as computer peripherals and data storage segments.

MTI has downgraded the forecast for Singapore's economic growth in 2020 to -7.0 per cent to -4.0 per cent, amid the global economic weakness and continued uncertainties, especially with the risk of subsequent waves of Covid-19 infection in major economies such as the United States and the Eurozone.

This marks a notable decline from the previous -4.0 per cent to -1.0 per cent forecast.

Elaborating, MTI permanent secretary Gabriel Lim said that the outlook for Singapore's economy has weakened further since March amid the dreary global economic climate.

Outward-oriented sectors such as manufacturing, wholesale trade as well as transportation and storage, will be adversely affected by the sharper-than-expected slowdown in many of Singapore's key markets, as well as more prolonged supply chain disruption, he said.

But despite this, the biomedical manufacturing cluster within the manufacturing sector remains one of the "pockets of resilience"and is expected to continue to expand, bolstered by the production of pharmaceutical and biological products.