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Malaysia’s industrial production will continue to grow this year

Malaysia’s industrial production will continue to grow this year

13 Apr 2022

Malaysia’s industrial production has been projected to continue to grow this year as businesses increase production activity to cope with growing demand.

To recap, in line with the research arm of MIDF Amanah Investment Bank Bhd’s (MIDF Research) expectation, Malaysia’s industrial production index (IPI) growth moderated further to 3.9 per cent year on year (y-o-y) in February 2022, the slowest annual growth in five months.

“Overall, we think demand outlook will be better this year in view of stronger economic growth, further reopening of the economy, growing domestic spending and still robust external demand,” MIDF Research said.

“Nevertheless, the near-term production outlook will be subject to downside risks from external developments, particularly the Russia-Ukraine conflict and extended lockdown in China.

“In other words, business activities may be impacted by the challenges from prolonged disruptions in the global supply chain and rising production costs due to high commodity prices.

“Based on the latest Malaysia’s manufacturing PMI which fell to 49.6 in March 2022 (50.9 in February 2022), Malaysia’s manufacturing growth moderated as businesses were impacted by the supply disruptions such as delayed shipments, and shortages of materials and containers.”

For the full year 2022, MIDF Research maintained its forecast for IPI growth at 4.3 per cent, compared to a growth of 7.2 per cent in 2021.

As for the research arm of Kenanga Investment Bank Bhd (Kenanga Research), its 2022 manufacturing index forecast has been retained at seven per cent (9.5 per cent in 2021).

“Manufacturing output will likely remain pressured in the near-term, especially amid heightened external risks coming from prolonged global supply chain issues, China’s Covid-19 lockdown measures, and the ongoing Russia-Ukraine conflict; this is evident from Malaysia’s PMI falling into contraction in March (49.6; February: 50.9),” Kenanga Research said.

“On the other hand, domestic demand should continue recovering as local Covid-19 cases decline and following the recent reopening of international borders.”

Source: Borneo Post Online

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