KUALA LUMPUR, July 12 (Bernama) -- MIDF Amanah Investment Bank Bhd has reiterated its projection that Malaysia's industrial production index (IPI) will grow stronger at 4.2 per cent this year compared to 0.7 per cent in 2023.
In a statement today, it said the IPI growth projection was upgraded as MIDF Research expects that the pick-up in external demand will support higher production of various export products such as natural gas and electrical and electronics components.
The investment bank said production of domestic-oriented products will also increase, given the continued rise in domestic spending.
“However, we are closely monitoring possible downside risks from the government’s policy changes that could lead to higher inflation outlook and hurt consumer sentiment, their purchasing power and future spending plans,” it said.
It said a significant reduction in final demand as a result of the high borrowing costs is another risk that could cause a weaker trade and production outlook.
Malaysia’s IPI growth eased to 2.4 per cent year-on-year (y-o-y) in May 2024 from 6.1 per cent y-o-y in April 2024, but it is still on an expansionary move since its rebound in the final quarter of last year.
“The moderation in the pace of growth in May 2024 was steeper than markets’ and our expectations, given the higher base in May last year,” it said.
According to MIDF Amanah Investment Bank, the continued expansion in IPI suggests that economic growth momentum remained positive in the first five months of 2024 (5M2024), with the average IPI growth relatively stronger at 3.6 per cent y-o-y compared to 1.9 per cent y-o-y in 5M2023.
On a month-on-month (m-o-m) basis, Malaysia’s IPI rebounded after two months of contraction, growing by 1.7 per cent m-o-m in May 2024 reflecting the strong rebound in manufacturing output (5.7 per cent m-o-m) and electricity generation (2.4 per cent m-o-m).
Globally, the Industrial Production Index (IPI) trends remained positive in May 2024, aligning with an improved global manufacturing Purchasing Managers' Index (PMI) reading of 51.0, marking the strongest pace of expansion in nearly two years.
-- BERNAMA
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