KUALA LUMPUR, Feb 7 — MIDF Research has maintained Malaysia’s Industrial Production Index (IPI) growth projection at 3.5 per cent this year despite the weaker-than-expected December 2022 IPI growth.
2022 IPI growth slowed to three per cent year-on-year (y-o-y) in December from 4.6 per cent y-o-y in November.
The research house said the projection has also factored in moderation in external demand and the diminished low-base effect.
“Apart from sustained rise in domestic spending, we foresee production will grow further on the back of improved supply conditions, easing cost pressure and better supply of foreign workers,” it said in a research note today.
However, MIDF Research said it remained cautious about the probability of the 2023 IPI outlook being negatively impacted by a sharper-than-expected fall in global demand, prolonged high inflation and renewed risk of supply disruptions.
Meanwhile, it said 2022 IPI grew by 6.9 per cent, which was not too far from MIDF Research’s estimate of seven per cent.
“Production continued to grow last year after 7.2 per cent growth in 2021 as companies ramped up production to cope with growing demand, both from domestic and export markets,” it said.
It said 2022 IPI growth was underpinned by stronger output growth in domestic-oriented sectors, which grew faster at 12 per cent compared with 10.7 per cent in 2021, on the back of economic reopening and transitioning into endemic phase in contrast to moderate output growth in export-oriented sectors of seven per cent compared with 13 per cent in 2021.
— Bernama
