M’sia’s economic growth for 4Q will likely remain at four pct — Analysts
Malaysia’s industrial production index (IPI) picked up to 4.2 per cent year-on-year (y-o-y) in October, on resilient domestic demand and a pick-up in mining output during the month.
This suggests that the country’s economic growth in the fourth quarter (4Q) will likely remain at around four per cent, on a y-o-y basis, analysts observed.
RHB Research Sdn Bhd (RHB Research) in a report, pointed out that the acceleration in industrial production was on the back of a pickup in manufacturing activities and a rebound in mining production, but partly offset by a slowdown in electricity production.
It added, the pickup in manufacturing activity was on account of a quicker growth in the production of the domestic-oriented industries and export-oriented electrical & electronics (E&E) products.
Overall, it projected, “We envisage 2017 real gross domestic product (GDP) to sustain at a relatively stable pace of four per cent in 2017 (4.1 per cent estimated for this year) on account of a sustained increase in domestic demand, on the back of a resilient consumer spending, and a modest rise in public spending and private investment.”
More on Malaysia’s IPI performance, RHB Research noted that as it stands, the manufacturing production index, which accounts for 65.9 per cent of the IPI, gained pace to 4.2 per cent y-o-y in October, from four per cent in September, and compared with 4.6 per cent in August.
“In contrast to a deeper contraction in exports, the pick-up in manufacturing activity was held-up by domestic-oriented manufacturing of food, beverages & tobacco and a faster rate of growth in manufacture of non-metallic mineral products, basic metal and fabricated metals. The export-oriented E&E products also gained pace in line with E&E exports.
“These were, however, partly offset by the slowdown in the manufacture of textiles, wearing apparel, leather products & footwear and petroleum, chemical, rubber and plastic products. At the same time, the production of transport equipment reversed into a decline in October. On the same note, mining output bounced back into a growth of 3.5 per cent y-o-y in October, following a decline of 0.3 per cent in September, on account of a pick-up in crude oil and natural gas production,” it explained.
However, it pointed out that the pick-up in mining output was partly offset by the slowdown in electricity output to 6.9 per cent y-o-y during the month, from 7.1 per cent in September.
According to the World Bank, Vietnam’s GDP per capita growth has been among the fastest in the world since the 1990s, averaging at 6.4 per cent a year in the 2000s.
Vietnam’s economy continued to strengthen in 2015, with an estimated GDP growth rate of 6.7 per cent.
Among sectors of the Vietnamese economy that Malaysian companies could tap into are energy, infrastructure as well as oil and gas.
“They need a lot of investments in power and also highways linking north and south. I am sure Malaysian companies are prepared to look at these opportunities,” said Mustapa.
To attract more inbound investments from Vietnam, Mustapa sees the Malaysia My Second Home and medical tourism as two potential areas to tap into.
“I see a lot of potential in Malaysia My Second Home due to the growing middle class in Vietnam and outside Vietnam. There is also growing interest in medical tourism to Malaysia,” he added.
Mustapa, who led a 40-member delegation comprising business leaders from the Asean Business Club and Kuala Lumpur Business Club, said the government would get the private sector to be actively involved in driving promotional efforts.