News Room - Business/Economics

Posted on 08 May 2009

Malaysia's industrial output to drop further

Malaysia’s industrial output is forecast to decline further in March but is seen stabilising over the coming months as forward-looking indicators in China and the United States stabilise.

 

On Wednesday, Credit Suisse Group AG said in a report that April’s new manufacturing orders in China and the United States gained over production for the first time in 14 months.

 

According to economists polled by StarBiz, Malaysia’s industrial production index (IPI), which is scheduled for release on Monday, would show a contraction year-on-year due to lower demand.

 

The IPI declined 14.7% year-on-year in February and fell a revised 19.8% in January. In February, the manufacturing sub-index fell 18.8%, mining down 7.3% and electricity declined 3%.

 

CIMB Investment Bank Bhd has forecast the industrial output to decline 17.1% in March with the manufacturing sub-index contracting 22.7%.

 

Maybank Investment Bank Bhd chief economist Suhaimi Ilias said factory orders were not visible until this month.

 

“Things only improved in April based on comments by the Federation of Malaysian Manufacturers and by port operators, who saw an increase in volume,” he said.

 

Suhaimi said the manufacturing and mining sub-indices would continue to drag the IPI down.

 

“We’ll only see stabilisation of economic numbers in the second quarter,” he said.

 

Daiwa Institute of Research chief (Asia) economist PK Basu said the first quarter could be the bottom of the cycle.

 

“We’ll see better numbers for the rest of the year,” he added.

 

Basu said across Asia, numbers had been marginally better with an improvement in electronic and electrical (E&E) exports.

 

Malaysia’s exports, like other export-reliant economies in the region, is heavily based on E&E. Other exports in the region include commodities and autos.