Malaysia’s industrial sector to maintain momentum in the near term: Analysts - MIDA | Malaysian Investment Development Authority
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Malaysia’s industrial sector to maintain momentum in the near term: Analysts

Malaysia’s industrial sector to maintain momentum in the near term: Analysts

10 Feb 2025

Malaysia’s industrial sector is poised to maintain positive momentum in the near term, underpinned by resilient domestic demand and a gradual easing of supply chain constraints, said Public Investment Bank Bhd (PIBB).

In a note today, PIBB opined that downside risks to external demand remain pronounced, particularly in the second half of 2025 (2H 2025), as subdued global growth and persistent geopolitical uncertainties could dampen export-oriented industries.

“That said, sustained private consumption, targeted fiscal support for investment, and a measured recovery in key trading partners could provide some offsetting support to mitigate external pressures,” it said.

Kenanga Investment Bank Bhd (Kenanga IB) said the manufacturing index is expected to expand by 4.7% in 2025 compared with 4.4% in 2024.

“Growth momentum of manufacturing to continue in 1H 2025, supported by a low base effect from the early part of 2024, the ongoing tech upcycle, and strong domestic demand, backed by a steady labour market and record-high government spending under Budget 2025.

“We also believe Malaysia could benefit from a renewed trade war as Trump’s policy shift may drive trade and investment diversion,” it said.

Kenanga IB maintained Malaysia’s Q4 2024 gross domestic product (GDP) growth forecast at 4.6%, reflecting a second consecutive quarter of moderation weighed mainly by slower manufacturing expansion.

“That said, 2024 GDP growth is likely to settle at 5% and is projected to moderate to 4.8% in 2025,” it said.

CIMB Securities Sdn Bhd forecast 5% GDP growth for 2025.

“Given the softness of the 4Q 2024 industrial data, we expect GDP growth to come in at 5.1% for 2024, slightly missing our earlier estimate of 5.2%.

“For 2025, a sustained external demand recovery fuelled by the global tech upcycle, alongside strong investments and resilient consumer spending, is anticipated to sustain GDP growth at 5%, consistent with the government’s target of 4.5% to 5.5%.

“Nevertheless, downside risks remain elevated owing to uncertainties about a potential global trade war escalation, which may heighten global inflationary pressures, prompting central banks to adopt a more cautious approach to rate cuts, potentially dampening growth prospects,” it added. 

Source: Bernama

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