Global, domestic demand drives record manufacturing sales
12 Jun 2021
Economists believe that the improving domestic and global demand drove Malaysia to post the highest growth in manufacturing sales, at 72.5 per cent year-on-year (y-o-y), in April 2021.
Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the economy was more open since March this year, therefore helping in driving the sharp acceleration in manufacturing sales.
“The low base recorded during April 2020 is the main reason for the big jump in terms of y-o-y comparison; it’s due to a greater scale of lockdown during the Movement Control Order (MCO) 1.0.
“Therefore, it is a combination of the low base effect, more open economy compared with last year and, of course, improving global demand,” he told Bernama.
In a statement yesterday, the Department of Statistics Malaysia said the sharp increase in manufacturing sales value to RM130.6 billion in April was driven by transport equipment and other manufactures (332.4 per cent), electrical and electronics products (80.2 per cent), and petroleum, chemical, rubber and plastic products (49.1 per cent).
Mohd Afzanizam said that as the industry demand normalised, the demand for transport equipment and components would also follow suit.
“There was a significant jump in total industry volume as vehicle sales surged 381 times y-o-y to 57,912 units in April 2021 compared with only 152 in the same month last year,” he pointed out.
UOB Malaysia senior economist Julia Goh said the extension of the sales tax exemption until June 30, 2021, from Dec 31, 2020, helped to boost transport equipment and other manufactures, which peaked in April 2021.
“Domestic spending, particularly for the purchase of vehicles following the government incentives, has helped to buffer domestic-oriented production,” she said, adding that the April 2021 figures also reflected the resumption of production post-MCO 2.0.
Meanwhile, Sunway University economics professor Yeah Kim Leng said the recovery in domestic demand in the United States and Europe, together with stronger growth in the Chinese economy, also contributed to the surge in manufacturing sales.
“The electrical and electronics products, transport equipment, chemicals, rubber and other export-based manufacturing are key beneficiaries of the rising import demand for consumer-related products in major advanced countries that are able to contain the COVID-19 pandemic through mass vaccinations,” he said.
Yeah added that the low base and rising export sales were expected to sustain Malaysia’s manufacturing performance in the coming months although the strong y-o-y sales growth was expected to decline from June onwards as the base effect tapered off.