Malaysia’s IPI to continue recovery in coming monthsMIDF Research

11-Jul-2020 Intellasia | TheedgeMarkets | 7:17 AM Print This Post

MIDF Amanah Investment Bank Bhd Research (MIDF Research) expects Malaysia’s Industrial Production Index (IPI) to continue to recover in the coming months after the rate surged 18.2 percent month-on-month (m-o-m) in May 2020.

In a note today, the research house said this is in view of the improvement in the manufacturing Purchasing managers’ Index (PMI), which rose to 51 in June 2020 from 45.6 in May 2020.

“While we expect that there will be continued recovery in production in the coming months, the level of activity will take time to revert to the pre-COVID-19 pandemic level,” it said.

The Department of Statistics Malaysia (DoSM) announced today that the country’s IPI rose 18.2 percent m-o-m in May 2020 as the government has allowed more industries to resume operations, attributable to the increase in all indices, namely Manufacturing (25.9 percent), Electricity (13.7 percent) and Mining (0.4 percent).

However, on a year-on-year (y-o-y) basis, DoSM said the IPI fell 22.1 percent during the month compared with May 2019 due to the significant decline in all indices, namely Manufacturing (-23.2 percent), Mining (-22.2 percent) and Electricity (-10.3 percent).

The annual contraction in May 2020, however, was smaller than the 32 percent decline seen in April 2020 due to the implementation of the Movement Control Order (MCO) to prevent COVID-19 outbreaks.

MIDF Research said May 2020′s yearly performance was in line with its expectations as more business activities were allowed to reopen and restart their operations.

“The slower decline in May 2020 was attributable to the recovery in manufacturing output and electricity generation.

“Nevertheless, output for the mining sector fell at a faster pace during the month,” it said.

Moving forward, the research firm is maintaining its projection that IPI growth would be in negative territory for the whole year, at 5.4 percent for 2020 compared to 2.3 percent in 2019.

“This takes into account the sharp decline in production activities after the MCO,” it said, adding that the IPI fell by an average of 10.4 percent y-o-y for the first five months of this year.


Category: Malaysia

Print This Post