Overall IP grew by 5.8% y/y in December 2021. This was due to a stronger growth in the manufacturing sector, primarily led by the E&E sector driven by a more robust external demand. The risk from this point would be related to Omicron, as cases have exceeded 5 digits on a daily basis, and could continue until the end of March 2022.

Modest IP Numbers in December

Manufacturing and Electric Production Were the Drivers 

According to the Department of Statistics Malaysia (DOSM), the overall industrial production grew by 5.8% y/y in Dec 2021. This translated to an 8.9% growth for 2021 overall. The manufacturing sector and the electricity production were the drivers, growing by 8.4% y/y and 3.7% y/y respectively. However, production of mining declined by 2.5% y/y.

Strong Growth in E&E Production

Within the manufacturing sector, the E&E production expanded by 18.2% y/y, coinciding with the latest exports numbers, due to strong demand in the final months of 2021.

Outlook

There is a risk that the latest surge of Omicron-related cases could disrupt production. Health Minister Khairy Jamaluddin warned that Malaysia is already facing a full-scale Omicron wave, and daily cases could reach 15K soon. While most reported cases would not require hospitalisation, there is the risk of authorities could imposing tighter SOPs to keep infections low.

Source: AmInvest Research - 8 Feb 2022