Malaysia’s industrial production is expected to perform better in 2024, supported by a recovery in global manufacturing activities.
PETALING JAYA: China, the largest trading partner of Malaysia for 15 straight years, is a key factor that will determine how Malaysia’s industrial production will perform this year.
Analysts said Malaysia’s industrial production will grow stronger in 2024, if the Chinese economy sees a further recovery that would boost external demand, among other catalysts.
However, a sluggish China amid a protracted property crisis and a poor consumer and business confidence would limit the improvement in Malaysia’s industrial production index (IPI).
In 2023, the IPI posted a weak expansion of 0.9% as compared to 6.7% in 2022.
This year, however, Malaysia’s industrial production is expected to perform better, supported by a recovery in global manufacturing activities.
“Anticipating a positive trajectory for 2024, we project that a recovery in external demand coupled with global manufacturing activities will fortify Malaysia’s IPI, leading to a growth range of 3.5% to 4.5%.
“The sustained expansion of domestic demand is expected to further contribute to the overall IPI growth this year,” TA Research said in a note.
It added that its optimism is also grounded in the recent stabilisation of manufacturing activities reported in January, as highlighted in the latest purchasing managers’ index (PMI) reports.
January’s readings indicate tentative signs of improvement, with domestic manufacturers expressing optimism and foreseeing an uptick in demand.
Meanwhile, Kenanga Research said it has maintained its fourth-quarter 2023 gross domestic product (GDP) growth forecast at 3.7%.
This is given the persistent slowdown in the manufacturing index growth.
“We expect the manufacturing sector recovery will pick up pace particularly in the second half of 2024, driven by the technology upcycle and China’s gradual post-pandemic recovery.
“Alongside a resilient services sector backed by increased tourist arrivals, we expect the 2024 GDP growth to expand further to 4.9%,” it said.
Kenanga Research further pointed out that the manufacturing index is likely to expand by 4.6% in 2024.
Hong Leong Investment Bank Research also has a positive view on the manufacturing activities.
The research house has maintained its 2024 GDP growth forecast for the country at 4.8% year-on-year, compared to an estimated 3.8% growth in 2023.
