KUALA LUMPUR, May 9 — The better-than-expected industrial production index (IPI) in March 2023 signalled a sustained expansion in the gross domestic product (GDP) for the first quarter of 2023 (1Q 2023), MIDF Amanah Investment Bank Bhd said.
Citing data released by the Department of Statistics Malaysia (DOSM) earlier today, the investment bank said Malaysia’s IPI continued to expand by 3.1 per cent year-on-year (y-o-y) in March 2023 from 3.5 per cent y-o-y in February 2023 and grew by 2.8 per cent y-o-y in 1Q 2023 versus four per cent y-o-y in 4Q 2022.
“Despite concerns over slowing growth momentum, the recent economic indicators pointed to continued expansion in Malaysia’s economic growth in 1Q 2023.
“Given the confidence the economy will continue to grow, we believe this enabled Bank Negara Malaysia (BNM) to proceed with its policy normalisation by raising the overnight policy rate (OPR) back to the pre-pandemic level of three per cent at the monetary policy meeting last week,” it said in a research note today.
Moving forward, MIDF Amanah Investment Bank said it has maintained its projection that Malaysia’s IPI would continue to grow but at a moderate pace of 3.5 per cent in 2023 compared with 6.7 per cent last year with increased domestic demand to help to cushion the drag from slower external demand.
It said Malaysia and other trading nations are also expected to benefit from recovering demand from China although the spillover in the first three months of this year had been rather limited.
On the near-term outlook, the investment bank said it has maintained a cautiously optimistic view as it expected production activities could be constrained by the prolonged weakness in global demand, particularly for manufactured goods, escalation of geopolitical tensions, sticky inflation and a more significant slowdown in the global economy.
BNM is scheduled to announce the 1Q 2023 GDP results this Friday (May 12).