Malaysia’s manufacturing industry to grow by 8.8 per cent in 2022

KUCHING: Malaysia’s manufacturing industry is expected to grow by 8.8 per cent in 2022 despite the recent slowdown in manufacturing activity, as reflected by the latest manufacturing Purchasing Managers’ Index (PMI), analysts observed.

In a report, the research team at Kenanga Investment Bank Bhd (Kenanga Research) said the recent slowdown in manufacturing activity, as reflected by the latest manufacturing PMI, matches its expectation of a sharp slowdown in 4Q22 GDP growth.

This was largely due to the high base effect, weak external demand from key trading partners, and the impact of China’s zero-COVID policy.

“Nonetheless, we continue to expect manufacturing growth to grow by 8.8 per cent in 2022 (2021: 9.5 per cent). Likewise, given the better-than-expected 3Q22 GDP growth (14.2 per cent), we have revised earlier our 2022 GDP growth forecast to 8.6 per cent from 6.5 to seven per cent (2021: 3.1 per cent), considering the sustained momentum in the domestic demand on the back of various policy support and continued recovery in the tourism-related sub-sector.

“For 2023, we expect growth to moderate to 4.3 per cent due to the global economic slowdown, tighter financial conditions, and rising external headwinds,” it opined.

On Malaysia’s manufacturing activities, Kenanga Research noted that the manufacturing sector remained at the contraction level (below the neutral level: 50.0), reflecting a persistent weakness in demand amid subdued orders and output. New orders also softened for a third straight month in November, reaching the lowest level since September 2021, reflecting a muted demand condition.

The external demand also recorded a downtrend, with new export orders falling for the fifth straight month, in line with the rising risk of a global growth slowdown.

Nevertheless, it pointed out that optimism remained for the seventeenth straight month amid hopes that demand would normalise in the longer run.

However, the degree of confidence fell to a five-month low, weighed by concerns over the impact of the current economic condition.

Source: The Borneo Post