KUALA LUMPUR: Malaysia’s industrial sector is poised to maintain positive momentum in the near term, underpinned by resilient domestic demand and a gradual easing of supply chain constraints, says Public Investment Bank Bhd (PIBB).
In a note, PIBB opined that downside risks to external demand remain pronounced, particularly in the second half of 2025 (2H25), as subdued global growth and persistent geopolitical uncertainties could dampen export-oriented industries.
“That said, sustained private consumption, targeted fiscal support for investment and a measured recovery in key trading partners could provide some offsetting support to mitigate external pressures,” it said.
Kenanga Investment Bank Bhd
(Kenanga IB) said the manufacturing index is expected to expand by 4.7% in 2025 compared to 4.4% in 2024.
It noted that the manufacturing sector’s growth momentum is expected to continue in 1H25, supported by a low base effect from the early part of 2024, the ongoing tech upcycle and strong domestic demand.
The momentum is also backed by a steady labour market and record-high government spending under Budget 2025.
“We also believe Malaysia could benefit from a renewed trade war as Trump’s policy shift may drive trade and investment diversion,” it said.
Kenanga IB maintained its gross domestic product (GDP) growth forecast for the fourth quarter of 2024 (4Q24) at 4.6%, reflecting a second consecutive quarter of moderation, weighed mainly by slower manufacturing expansion.
“That said, 2024 GDP growth is likely to settle at 5% and is projected to moderate to 4.8% in 2025,” it said.
CIMB Securities Sdn Bhd also projected a 5% GDP growth for 2025.
“Given the softness of the 4Q24 industrial data, we expect GDP growth to come in at 5.1% for 2024, slightly missing our earlier estimate of 5.2%.
“For 2025, a sustained external demand recovery fuelled by the global tech upcycle, alongside strong investments and resilient consumer spending, is anticipated to sustain GDP growth at 5%, consistent with the government’s target of 4.5% to 5.5%.
“Nevertheless, downside risks remain elevated owing to uncertainties about a potential global trade war escalation, which may heighten global inflationary pressures, prompting central banks to adopt a more cautious approach to rate cuts, potentially dampening growth prospects,” it added. — Bernama
