KUALA LUMPUR - Analysts are optimistic about the growth prospects for Malaysia’s industrial sector this year, despite a softer industrial production index (IPI) growth of 3.1 per cent year-on-year recorded in February 2024.
Although the IPI growth in February increased modestly, marking a slowdown from the 4.3 per cent growth recorded in January, it surpassed market expectations of a growth rate between 1.5 per cent and 1.8 per cent by a considerable margin.
Public Investment Bank Bhd in a note said that, however, external demand remains the primary risk factor influencing the Malaysian economy.
"While both the government and central bank anticipate economic expansion within the range of 4-5 per cent for the year, our outlook suggests a more conservative estimate of around 3.7 per cent, contingent upon the magnitude of downside risks exerting notable influence,” it added.
Yesterday, the Department of Statistics Malaysia (DoSM) said the moderation of February’s IPI was primarily attributed to the slower output growth in the manufacturing sector, which grew by 1.2 per cent compared with 3.7 per cent in January 2024.
Kenanga Investment Bank Bhd (KIBB) said the manufacturing index forecast is retained at 4.6 per cent in 2024 (2023: 0.7 per cent), as the momentum may pick up pace in the second half of 2024.
"We continue to believe that the manufacturing condition will improve further towards the end of the year, mainly driven by the expected upswing in the technology cycle and China's gradual recovery following a significant stimulus implemented by the country.
"Nevertheless, the manufacturing condition could experience a sluggish recovery in the near term, as reflected by the latest Manufacturing Purchasing Managers' Index (PMI) reading, which fell to 48.4 in March (Feb: 49.5) and remained at a contraction level since August 2022,” it said in its Economic Viewpoint.
Source: https://www.sinardaily.my/article/217086/focus/money/malaysias-industrial-sector-poised-for-growth-despite-slower-february-ipi---analysts