KUALA LUMPUR: Research houses are maintaining their 2022 gross domestic product (GDP) growth estimate of 8.5-9.0 per cent despite the moderating Industrial Production Index (IPI).

In a note today, Ambank Research said industrial output was generally robust in 2022 but they expected the momentum going forward to be affected by softening global economic activities in 2023 as cumulative effects from monetary policy tightening among major central banks start to show impact.

"On the other hand, we see China's reopening as a positive sign to cushion the impact of impending global economic slowdown," the research house said.

On the domestic front, Ambank Research said the interest rate level remains accommodative hence it continues to see support coming from private consumption.

"Our preliminary estimate shows GDP for the fourth quarter of 2022 (4Q 2022) to be in the range of 6.5 - 7.0 per cent, which is slower than the 14.2 per cent in the prior quarter, partly due to dissipating favourable base effects," it said.

For Malaysia's GDP, Kenanga Investment Bank expects a sharp deceleration in 4Q 2022 growth, which would bring 2022 growth to its forecast of 8.6 per cent (2021: 3.1 per cent).

"We continue to project 2023 growth to ease to 4.3 per cent in line with a tepid global economic outlook," the research house said.

Meanwhile, 2023 manufacturing index growth is expected to moderate further to 6.6 per cent year-on-year (2022: 8.2 per cent; 2021: 9.5 per cent), with manufacturing growth likely to be weighed by weak external demand as the global economy braces for a slowdown and waning domestic demand, especially after the festive period.

"This is evidenced by Malaysia's manufacturing Purchasing Managers' Index, which fell for a fifth straight month in January (46.5; November: 47.8) and remained well under the contractionary level.

"There is moderate upside risk from China's earlier-than-expected reopening and its quick recovery from a severe Covid-19 outbreak as well as strong labour data from the US suggesting that it may avoid a recession," Kenanga Investment Bank added.

 - BERNAMA