Positive outlook for industrial activity despite slowdown

PETALING JAYA: Despite a significant slowdown in factory output expansion in January 2018, MIDF Research believes the industrial activity will continue to trend upward underpinned by persistent upbeat momentum in global trade and a gradual rise in commodity prices.

Malaysia’s industrial production index (IPI) increased 3% year-onyear in January 2018, well below the market expectation of 7.1%.

According to Statistics Department, the growth was supported by the expansion in the manufacturing, mining and electricity sectors.

The manufacturing sector output increased 4.8% in January 2018 after recording an increase of 5.3% in December 2017. The major sub-sectors which recorded increases were food, beverage and tobacco products (14.4%), petroleum products, chemicals, rubber and plastic (2.1%) and electrical and electronic equipment products (4%).

Meanwhile, the mining sector output registered a growth of 1.5%, contributed by the increases in crude oil index (1.8%) and natural gas index (1.5%).

The electricity output expanded 4.3% in January 2018 after recording a rise of 3.9% in December 2017.

MIDF Research expects IPI to grow 4.3% in 2018 with an expected expansion of 3.5% to 4.5% in the first half of the year.

“Based on solid uptrend in trade activities and further steady domestic consumption, we expect industrial production growth to hit 4.3% in 2018. Nevertheless, headwinds from possible trade tension could posed possible threat to the estimate.”