Kenanga IB Holds Malaysia's 2025 Manufacturing Growth Forecast At 3.9 Pct

KUALA LUMPUR, Sept 11 (Bernama) -- Kenanga Investment Bank Bhd (Kenanga IB) is maintaining its 2025 manufacturing growth forecast for Malaysia at 3.9 per cent, down from 4.3 per cent last year, citing a cautious outlook for external trade.

In a research note, it noted that the country’s industrial production index (IPI) rose 4.2 per cent year-on-year (y-o-y) in July 2025, compared to 2.9 per cent in June, marking the strongest growth in seven months.

It said the surge was driven by higher manufacturing output and a rebound in the mining index, although it was partly offset by slower electricity production.

"Manufacturing index expanded 4.4 per cent y-o-y, compared to 3.6 per cent in June, driven by robust electrical and electronic output (July: 8.5 per cent; June: 6.4 per cent).

"Mining index rebounded sharply to 4.3 per cent (June: -0.01 per cent), after three straight months of declines, boosted by a rebound in crude petroleum and condensate (July: 1.0 per cent; June: -3.2 per cent), and stronger natural gas output (July: 6.8 per cent; June: 2.3 per cent)," it said.

On the outlook, Kenanga IB said July’s gains point to a strong start for the third quarter of 2025 (3Q 2025), partly due to frontloading ahead of the imposition of the United States’ (US) tariffs in August. 

At the same time, it said the latest manufacturing purchasing managers' index (PMI) points towards better manufacturing activity (August: 49.9; July: 49.7), the highest since June 2024, signalling more stable conditions in 3Q 2025. 

The investment bank noted that this should support overall gross domestic product (GDP) growth and help cushion a likely slowdown in the final quarter (4Q2025F: 4.0 per cent; 3Q2025F: 4.3 per cent).

"Risks remain from the US President Trump’s trade stance, especially trade tensions with China, as his call for the European Union to impose tariffs of up to 100 per cent on China and India to pressure Russia to end the war with Ukraine adds further uncertainty to the global trade outlook. 

"Against this backdrop, we maintain our 2025 gross domestic product growth projection at 4.3 per cent, compared to 5.1 per cent last year, amid a cautious 4Q 2025 outlook," it said, adding that it expects domestic demand to remain resilient and continue supporting growth.

-- BERNAMA