KUALA LUMPUR: RHB Investment Bank Bhd (RHB IB) expects Malaysia’s Industrial Production Index (IPI) momentum to resume accelerating in 2024, in tandem with rosier trade prospects and improved investment appetite.
The research house also foresees more signs of recovery in export performance in the first half of 2024 (1H 2024), while the rising capital goods imports also point to potential growth in manufacturing activities in the upcoming months.
"Our sanguine view is predicated on three key catalysts: improved trade prospects, more signs of recovery in the global technology cycle, and robust domestic economic activities.
"We also observed more evidence pointing towards a resurgence in exports by 1H 2024 as outbound shipments have gathered steam since the fourth quarter of 2023,” it said in a note today.
RHB IB also highlighted the rise in outbound shipments to key destinations, including China, the United States (US) and Singapore.
"We believe that Malaysia’s export performance will be supported by the recovery in China’s economy in 2024, as key export products, such as electrical and electronic (E&E), machinery and equipment, and other manufactured goods, command the lion's share of trade in China’s import demand,” it said.
It said the exports and manufacturing sectors will also be lifted by robust demand for E&E products in the upcoming months, including semiconductors and consumer E&E products, amidst the reacceleration of the global technology cycle.
On another note, RHB IB said higher domestic consumption and investment activities are anticipated to support the manufacturing sector this year, given the improvement in investment appetite, as indicated by higher capital goods imports and robust capital formation.
"Further upsides on investment activities would come from business-friendly policies and incentives focusing on priority sectors, such as technology, tourism and agriculture as well as those with export capacity, coupled with the continuation of major infrastructure projects.
"Consumer spending is expected to increase in 2024 amid a tighter labour market and improved consumer sentiment,” it said.
According to the Department of Statistics Malaysia, the IPI, which measures the real output in the manufacturing, mining and electric industries, registered a marginal increase of 0.6 per cent year-on-year in November 2023. - Bernama
