KUALA LUMPUR, Feb 9 ― Malaysiaʼs industrial production has picked up in December last year after two months of declines, research outfit Moody's Analytics said today amid the Covid-19 pandemic here.
In its report today, the financial intelligence company said manufacturing-led growth saw a rise by 4.1 per cent in December 2020 compared the same month in 2021, following a gain in November 2020.
“In manufacturing, electrical products shot up by 7.6 per cent year-on-year, following an 8.6 per cent increase in November,” Moody's Analytics said in its report.
A rise in production of transport equipment also contributed to the increase where it rose by 8.4 per cent year-on-year from a 6.5 per cent rise previously.
Growth of consumer products such as food and beverages, and tobacco, as well as textiles, however remained sluggish as a result of the locally enforced movement control order (MCO).
However for mining and electricity, production for these two sectors continued to fall due to oil prices.
“Mining production dropped by 5.4 per cent year-on-year following a 15.4 per cent plunge in November.
“Crude oil declined by 9 per cent year-on-year after failing by 15.8 per cent previously while natural gas dipped by 2.5 per cent following a 15.1 per cent decline in November.
“Electricity production declined by 0.2 per cent year-on-year, following the previous month's 2.5 per cent decrease,” Moody's Analytics said.
Yesterday, the Department of Statistics Malaysia showed that the manufacturing sales grew 2.1 per cent year-on-year to RM119.9 billion in November 2020.
In a statement yesterday chief statistician Datuk Seri Mohd Uzir Mahidin said the year-on-year growth in sales value during the month was driven by the increase in transport equipment and other manufactured products (10.5 per cent), electrical and electronics products (5.3 per cent), and food, beverages and tobacco products (5.1 per cent).
As for the full year reading for the industrial production index (IPI), Moody's Analytics found a 4.2 per cent decline in 2020.
This marks the first yearly decrease since the global financial crisis in 2009, with mining taking the hardest hit due to record low oil prices last year.
“The fall in oil prices has since started to taper off, which bodes well for Malaysia's mining sector.
“Optimism is due to vaccine rollouts and supply cuts by OPEC have buoyed oil prices to near pre-pandemic levels,” it said.
Moody's Analytics however warned that renewed lockdown measures in Asia and Europe might weigh down on the demand for oil in the coming months.
“The domestic situation has also worsened, with Prime Minister Tan Sri Muhyiddin Yassin extending strict lockdown measures until February 18.
“The extension covers the Lunar New Year period, which will crush domestic demand,” it said.
On a slightly more promising note, Moody's Analytic said Decemberʼs trade report provides some optimism for a manufacturing-led rebound in 2021.
“However, much depends on external conditions, which are currently unstable.
“Lockdowns in Europe and Asia are still in place, even as countries race to roll out vaccines.
“Although Malaysia and other Asian countries managed to quickly subdue the initial wave of the virus, it appears that widespread vaccine distribution is necessary for a sustained rebound in the region,” it added.
