KUALA LUMPUR, Sept 11 — RHB Research expects Malaysia’s Industrial Production Index (IPI) to stabilise further in the fourth quarter (4Q) of 2023.
This is in tandem with gradual improvement in trade activities and external demand, in anticipation of higher demand from selected trade partners such as the United States and Asean economies, it said in a note today.
“We remain cautious on the downside risks emanating from global technology downcycle and China’s weak economic growth prospect.
“The IPI momentum improved for July on better performance in domestic and export-oriented industries with July’s IPI rebounding by 0.7 per cent year-on-year (y-o-y) versus June’s print of -2.2 per cent y-o-y, better than Bloomberg’s consensus estimate of -0.2 per cent y-o-y,” RHB Research said.
It added the mining and electricity sub-sectors registered positive growth of 4.2 per cent y-o-y and 1.5 per cent y-o-y, respectively.
Meanwhile, the manufacturing sector decreased by a smaller margin of 0.2 per cent y-o-y.
“We expect the manufacturing activities to show more signs of bottoming out by end-3Q 2023. We remain cautious on the downside risks emanating from global technology downcycle and weak China’s economic growth prospect,” RHB Research said.
Meanwhile, Ambank Research said the slower production in the manufacturing sector is expected to persist at the moment, as conditions from the external fronts have not shown any sign of improvement yet.
Despite a slight improvement in Malaysia’s IPI, which grew by 0.7 per cent in July, the manufacturing sector contracted by 0.2 per cent.
The latest global manufacturing purchasing managers’ index (PMI) remained under the contractionary level.
From the domestic front, it said the local manufacturing PMI also remained under the contractionary level in August 2023, marking the 12th month of contraction in a row.
Among the factors contributing to this include subdued production, limited new orders, and a decline in new export orders, though at a slower pace.
“Loan growth in the manufacturing sector contracted by 3.7 per cent y-o-y in June 2023 with a year-to-date average of -1.7 per cent y-o-y, where there was contraction in key sectors including electrical and electronic (E&E), chemicals, and rubber.
“Taking all of these factors into consideration, we view the economy will grow by four per cent for 2023,” said Ambank Research.
— Bernama
