Singapore Aerospace Industry Surges Ahead: Economic Survey 2022

Optimism And Challenges on The Path Ahead

This growth trajectory is expected to continue. Analyses by MTI suggest a further improvement in the aviation and air travel related segments, bolstered by the
improved outlook: “The growth outlook for aviation- and tourism-related sectors of the Singapore economy has improved as the ongoing recovery in international air travel and inbound tourism is expected to accelerate following the faster-than-expected relaxation of China’s border restrictions. These sectors include air transport, accommodation, and arts, entertainment & recreation.” Data and analyses from EDB’s Business Expectations of the Manufacturing Sector survey supports this, with a net weighted balance of 36% of aerospace firms projecting a higher level of production in the first quarter of 2023, compared to the previous quarter, in anticipation of an increase in demand for aircraft engine repair work and MRO services from commercial airlines.

The optimism of the aerospace sector is a notable exception, however, as the overall sentiment of Singapore’s manufacturing industry has turned negative due to uncertainties and risks that remain in the global economy. Tighter financial conditions in many advanced economies and continued interest rate hikes by major central banks could lead to disorderly market adjustments and reveal previously hidden vulnerabilities among heavily indebted corporations and households, thereby raising the risk of financial instability. Additionally, further escalation in the war in Ukraine and geopolitical tensions among major global powers could worsen supply disruptions, dampen confidence, and impact global trade.

Despite the challenges, Singapore’s external demand outlook for 2023 has improved slightly. Growth in China is projected to pick up in tandem with the faster-than-expected easing of its COVID-19 restrictions, leading to improvements in the growth outlook of regional economies. Moreover, the global supply situation continues to stabilise amidst softening global demand conditions, resulting in eased global commodity prices from 2022 levels.

To sustain its growth momentum, it is crucial for the Singaporean aerospace sector to remain vigilant and adaptable in navigating the volatile economic landscape. It will also have to address and surmount challenges including manpower tightness in the domestic talent market and intensifying competition in the region. By focusing on innovation, enhancing productivity, developing talent, working collectively and leveraging the policy supports for the industry, aerospace stakeholders can stay ahead of the curve.