KUALA LUMPUR (May 10): Although growth was more moderate in March 2024, MIDF Research has maintained its projection that Malaysia’s industrial production index (IPI) year-on-year growth will be stronger at 3.7% for the full year, compared with 1.1% in 2023.

MIDF said the projection is premised on its expectation that business outlook will continue to remain positive, in anticipation of continued growth in domestic spending, coupled with external demand recovery. 

However, downside risks include weak growth in major economies like China and the US; higher-than-expected inflation; and potential disruptions to the global supply chain, in view of the ongoing geopolitical tensions, MIDF said in a note on Friday, following the release of the official IPI data by the Department of Statistics Malaysia (DOSM). 

“These external developments could adversely affect the outlook for global trade and production activities,” MIDF added. 

Earlier on Friday, DOSM revealed that Malaysia’s IPI - which measures output from factories, mines, and power plants - climbed 2.4% year-on-year (y-o-y) in March, slower than February’s 3.1% y-o-y growth.

Despite the softer pace of growth than the previous month, Malaysia’s IPI extended its expansionary growth into the third consecutive month and it still surpassed the median 1.9% increase predicted in a Bloomberg survey. 

On a month-on-month basis, the index rebounded 7.5% in March, from February’s decline of 6.3%.

The overall moderation in industrial production was due to a notable slowdown in growth of the mining sector at 4.9% y-o-y, compared with 8.1% in February, MIDF said. This was mainly due to lower production of crude petroleum, it added.

Electricity generation grew by 7.8% y-o-y, moderating from the 1.5-year high of 10.9% registered in February, the research firm highlighted. 

In contrast, the manufacturing sector advanced slightly faster at 1.3% y-o-y against 1.2% in the previous month. MIDF said the faster pace of manufacturing production growth was buoyed by the rebound in the production of refined petroleum products, and the sustained expansion of production of electrical and electronics (E&E) items.  

https://www.theedgemarkets.com/node/711157