RHB INVESTMENT EXPECTS INDUSTRIAL PRODUCTION TO STAY SOFT IN THE FIRST HALF

KUALA LUMPUR, March 13 (Bernama) -- Malaysia’s industrial production momentum is expected to stay soft for the first half of 2023 (1H  2023) amid a cautious outlook on the manufacturing sector and trade performance, RHB Investment Bank Bhd said.

It said in a note that the ongoing slowdown in the global economy, partly due to the tightening financial conditions, is likely to weigh on Malaysia’s manufacturing activities.

"In view of the muted external demand, we project a softer Industrial Production Index (IPI) growth of around 5.5 per cent for 1H 2023. 

"We are more positive on the manufacturing sector outlook for 2H 2023, on anticipation of improvement in external demand following the recovery in the global economy," it said

Earlier today, the Department of Statistics Malaysia (DoSM) announced that Malaysia's IPI growth moderated to 1.8 per cent in January 2023 against 2.9 per cent in the preceding month, weighed down partly by slower growth in manufacturing output.

Meanwhile, Ambank Group has maintained Malaysia’s IPI growth projection to be around 4.5 per cent amid slower output in January 2023.

The bank noted that the country's production continued to see the effects of global monetary policy tightening on global trade, with Malaysia’s electrical and electronics (E&E) output growth turning flat, reflecting a slowdown in global trade.

"While IPI may have not bottomed, we see China’s reopening as the mitigating factor to any sharp decline," it said.

In the meantime, MIDF Research expects overall IPI growth to moderate to 3.5 per cent this year from 6.7 per cent growth last year, supported by domestic demand.

"Still, we foresee exports and production outlook to benefit from continued demand for E&E components and petroleum products, on top of the expected positive effect from the reopening of China’s economy.

"On the other hand, we remain cautious that weaker-than-expected global demand and regional production network could be the downward drag to Malaysia’s IPI outlook this year," it said.

-- BERNAMA