KUALA LUMPUR (Feb 8): The increase in Malaysia’s industrial production index (IPI) slowed down to 5.8% in December compared with 9.4% in November.

“The expansion of IPI [from a year earlier] was contributed by the increment of 8.4% in manufacturing index and 3.7% in electricity index.

“Meanwhile, the mining index recorded a decline of 2.5%,” said the Department of Statistics Malaysia (DOSM).

For the full year, the country’s cumulative 2021 IPI reading expanded 7.4% from a year earlier following a contraction of 4.2% in 2020. The annual increment was supported by the rise in all components: manufacturing index (9.5%), electricity index (2.3%) and mining index (1.5%).

The IPI for the fourth quarter of 2021 grew 6.9% as compared to the same period of the previous year.

On a month-on-month basis, December 2021 IPI reading increased 1.3% from November 2021, said DOSM.

Despite challenges in the early part of the year due to the ongoing global pandemic and supply chain issues, MIDF Research expects industrial output will continue to grow but at a slower pace this year in anticipation of growing demand.

MIDF forecasts Malaysia’s IPI to grow at a moderate pace of 4.3% in 2022.

“With global demand for manufactured goods and E&E (electrical & electronics) parts and components to continue growing, we expect the sustained growth in external demand will support Malaysia’s manufacturing output,” it said in a note.

Furthermore, MIDF said, the improved demand outlook on the back of increased domestic spending activity will help support manufacturing activities.

However, MIDF pointed out the challenges that the local producers are facing as a result of supply constraints, raw material shortages and rising production costs.

“While the Omicron-linked Covid-19 infections in Malaysia have been on the rise recently, we opine business activities will not be restricted as we foresee less need for another round of lockdown given the push for booster vaccination and still low strain on the domestic healthcare system, thus far,” said the research house.