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Positive growth in IPI may push Q2 GDP higher

10/08/2022 12:03 PM

KUALA LUMPUR, Aug 10 (Bernama) -- Malaysia’s gross domestic product (GDP) growth in the second quarter of 2022 (Q2 2022) is expected to be positive, based on the higher Industrial Production Index (IPI) readings and rising manufacturing sales in June 2022.

In a note today, Ambank Research said that it expects the economy to record a growth of 8.4 per cent year-on-year (y-o-y), noting that the official numbers for the Q2 GDP will be released on Friday.

“On the whole, we maintain our view of a 5.6 per cent GDP growth in 2022, with an upside of 6.0 per cent and downside of 4.8 per cent.

“The latest purchasing managers index (PMI) reading also improved to 50.6 in July 2022 from 50.4 in June 2022, and the PMI survey also suggested that new orders have picked up, despite price pressure and capacity constraints," it said.

Meanwhile, Hong Leong Investment Bank (HLIB) said on the global front, the manufacturing PMI fell to 51.1 in July as new export orders declined further amidst a contraction in international trade flows. 

“Nevertheless, the transition to COVID-19 endemicity status will remain supportive of the domestic-oriented manufacturing industries.

“Stronger Q2 2022 IPI growth is anticipated to contribute to higher Q2 2022 GDP as well, and we maintain our expectation for Bank Negara Malaysia (BNM) to raise overnight policy rate (OPR) by another 25bps in September," it said in a note today.

In a separate note, Kenanga Research opined that a higher manufacturing index growth is expected after June’s stronger-than-expected expansion, which had more than offset the contraction in April and May. 

It said manufacturing growth will likely remain supported by strong domestic demand and recovering external demand, with Malaysia’s PMI improving in July.

“However, downside risks to global growth remain, with the United Kingdom and the European Union still at risk of a recession, while the United States’ recession expectations have subsided of late.

"We maintain our 2022 GDP growth forecast between 5.0 and 5.5 per cent for Malaysia on continued optimism over strong domestic demand, but we remain cautious of external risks to growth amid supply chain disruptions and global recession concerns," it said.


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