Malaysia’s output experienced its steepest decline in nine years.
Results due to drop in manufacturing, mining, electricity indices
PETALING JAYA: More figures and data are starting to surface on how the coronavirus (Covid-19) has disrupted activities this year.
Malaysia’s Industrial Production Index (IPI) has slipped to its steepest decline in nine years after it slid 4.9% in March year-on-year (y-o-y).
The Statistics Department attributed the result to the decrease in all three indices of the IPI – manufacturing, mining and electricity.
Chief statistician Datuk Seri Dr Mohd Uzir Mahidin said the manufacturing sector output dropped 4.2% y-o-y in March as compared with a 6.2% increase in February.
“On a whole, the IPI for the first quarter recorded a growth of 0.4%, on the back of a 1.3% increase in the manufacturing index while the electricity and mining indices slid 0.4% and 1.8%, respectively,” he said.
Its major sub-sectors recorded declines, with electrical and electronics products dropping 5%, non-metallic mineral products, basic metal and fabricated metal products dipping 9.8% and food, beverages and tobacco shrinking 9.9%.
The mining sector output dropped 6.5% as both the natural gas index and the crude oil and condensate index contracted by 6% and 7.1%, respectively. The electricity sector output contracted 7% y-o-y in March.
Meanwhile, Malaysia’s manufacturing sales posted a downturn of 3% y-o-y in March to Rm110.2bil. In a seasonally adjusted terms, this is equivalent to a 9.5% decrease.
Uzir attributed the decline to a contraction in the transport equipment and other manufactured products by 7.4%, food, beverages and tobacco products by 5.9% and electrical and electronics products by 5.7%.
It is also worth noting that there was a 1.2% increase in employees of 27,541 people to a total of 2.26 million persons as of March and that salaries and wages paid rose 1.8% to Rm7.46bil.
As for the first quarter performance, the sales value of the manufacturing sector grew 2.2% to Rm339.4bil while the number of employees grew 1.2% while salaries and wages paid was up 3.4% to Rm22.7bil.
Other statistics released by the department yesterday included the quarterly construction statistics, which showed a 6.3% contraction y-o-y in value of construction work done to Rm35bil. These were due to the decline in the non-residential buildings sub-sector by 11%, followed by special trades activities and residential buildings sub-sectors by 8.6% and 7.6%, respectively.
The services sector grew 1.5% y-o-y to Rm437.8bil in the first quarter, which Uzir said was the lowest growth since the third quarter of 2015.
“There is already an impact on the services sector due to Covid-19. The tourism sector, on the other hand, began declining as early as the end of last year and it is more severe now.
“The enforcement of the movement control order (MCO) is expected to have a more significant impact in the coming quarter,” he said.
BIMB Securities Research said the pandemic is expected to weigh heavily on the manufacturing sector, given that the supply chain disruption and weak consumer demand were inevitable on the back of travel and movement restriction imposed in many countries.
It said trade activities would remain restrained as cross-border movement restrictions are still intact in most countries, with some factories not operating at full capacity in order to abide by social distancing measures, leading to disruptions in the global supply chain.
“It may take anywhere between six to 12 months before we see demand recovery on a firmer footing and the global supply chain adjusting to the new normal.
“This would further impact an export-oriented country like Malaysia, with its value-added manufacturing growth projected to contract in 2020 in line with a recessionary growth expectation for this year,” it said.
“The enforcement of the movement control order is expected to have a more significant impact in the coming quarter.” Datuk Seri Dr Mohd Uzir Mahidin