Singapore factory activity expands despite Iran war inflating costs and disrupting supplies

Singapore's manufacturing sector shows expansion according to Purchasing Managers' Index (PMI) data. However, the rise in energy prices caused by the Iran war has significantly increased production input costs. In particular, the increase in the prices of energy sources such as oil and natural gas has squeezed the margins of Singapore's manufacturing companies.

Supply chain disruptions are causing delays in procurement and delivery for Singapore manufacturers. Rising air freight costs and maritime risks caused by the Hormuz Strait crisis have increased logistics costs. Long-term supply planning by factories faces difficulty due to these uncertainties.

Economists predict that if the Iran war lasts longer, Singapore and the broader Southeast Asia region's economic growth rate could slow. The region is disproportionately affected by energy price increases due to its position as an energy importer.