Thailand
Malaysia: IPI seen to maintain growth momentum
PETALING JAYA: Malaysia’s industrial production index (IPI) is expected to grow at a moderate pace of 4.3% in 2022, following the strong performance last year that was primarily driven by the country’s higher manufacturing output.
With global demand for manufactured goods and electrical and electronic parts and components expected to continue growing, MIDF Research is projecting Malaysia’s IPI to resume its positive growth trajectory this year.
“We expect the sustained growth in external demand will support Malaysia’s manufacturing output.
“Furthermore, improved demand outlook on the back of increased domestic spending activity will also support the IPI outlook this year.”
However, considering the recent decline in the manufacturing purchasing managers’ index (PMI) to 50.5 last month from 52.8 in December 2021, MIDF Research said local producers have highlighted challenges due to 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 believe business activities will not be restricted as we foresee less need for another round of lockdown.”
The research house said this was due to the push for booster vaccinations and low strain on the country’s domestic healthcare system.
“Despite challenges in the early part of the year due to the ongoing global pandemic and supply issues, we expect industrial output to continue growing this year in anticipation of rising demand,” it said.
Separately, Kenanga Research said it expects Malaysia’s manufacturing index growth to ease slightly in 2022 to 8.5%, following the strong (9.5%) recovery in 2021.
“We expect the manufacturing output to maintain its strong growth this year, amid robust external demand and steadily growing domestic performance as Malaysia charts a sustained economic recovery.
“However, the impact of the new Omicron wave may mildly destabilise manufacturing momentum over the first quarter of 2022, with Covid-19 cases expected to rise even further and the manufacturing PMI already easing to a four-month low in January.”
Separately, TA Securities said Malaysia’s IPI recorded a stronger expansion of 7.4% in 2021, compared with a 4.4% contraction in 2020.
It noted that the increment was influenced by the rise in all components, namely, the manufacturing, mining and electricity indices.
“With the sustained growth in December, the overall output in the final quarter is showing a much better reading following the lifting of Covid-19 restrictions. The overall IPI appreciated by 6.9% year-on-year in the fourth quarter of 2021, compared with a 1.1% decline in the previous quarter.
“The increase was mainly due to the stronger growth of the manufacturing and electricity sectors. Moreover, the mining sector posted a smaller pace of decline during the quarter,” it said.
Based on the available data, TA Securities said it expects real growth domestic product to rebound in the final quarter of 2021.
Source: https://www.thestar.com.my/business/business-news/2022/02/10/ipi-seen-to-maintain-growth-momentum