KUALA LUMPUR, Aug 8 — MIDF Research has maintained Malaysia’s Industrial Production Index (IPI) growth estimate this year at 2.2 per cent versus 6.7 per cent in 2022, as it expects production and overall economic growth to moderate.
“Despite the projected positive growth, we remain cautious that the outlook can be weaker than anticipated, considering IPI growth having slowed to 1.3 per cent year-on-year (y-o-y) in the first half of 2023 (1H 2023) versus 5.4 per cent y-o-y in 2H 2022, which was closely linked to the weaker output in mining and export-oriented sectors.
“On that note, we foresee weak external demand and global manufacturing activities will continue to affect the IPI outlook,” it said in a research note today.
However, MIDF Research said resilience in domestic demand will continue to lend support to the overall demand outlook this year.
“Although easing cost pressure and better supply condition would result in fewer disruptions to the stability of supply, we view that several risks may constrain production outlook, such as the more significant decline in external demand, elevated inflation (which could affect spending plans and therefore final demand), and renewed rise in the cost of production,” it said.
Malaysia’s IPI growth weakened more than expected in June this year, contracted by 2.2 per cent y-o-y from a growth of 4.8 per cent y-o-y in May because of reduced output in the mining and manufacturing sectors.
MIDF Research said the pace of decline was sharper than the market forecast.
The mining output dropped by 6.4 per cent y-o-y as production for both crude petroleum and natural gas declined during the month, while the manufacturing output fell by 1.6 per cent y-o-y due to a reduction in export-oriented output such as refined petroleum, rubber products, computer and peripherals equipment, and machinery and equipment.
— Bernama
