Singapore’s GDP growth was far less than economists hoped in Q2, rising by just 1.7%. This followed another weak quarter in Q1 where the city state’s economy grew by 2.8%.

Critics suggest that Singapore’s manufacturing industry is to blame. The sector suffered a 4.0% decline in Q2 following a 2.7% decline from Q1. However, Singapore’s goods producing industry, in general, faces a decline too. Weak biomedical manufacturing and transport engineering clusters are the main cause.

Singapore’s contraction also results from a poor Q1 in the USA and Europe. As such, demand for certain export goods declined.

Firms are trying to counteract this decline. 70% of manufacturing firms plan to invest in new machinery and other technologies between April 2015 and March 2016. Ultimately, this will let companies stabilize the manufacturing sector by expanding production capacity and reaching export goals.

Given the continual decline in such clusters, this initiative should ...