KUALA LUMPUR, Jan 10 — MIDF Research has projected Malaysia’s industrial production index (IPI) for 2022 to grow at 4.3 per cent, mainly due to the upward growth trend of the IPI in October and November last year.
Earlier today, the Department of Statistics Malaysia (DoSM) said the IPI increased 9.4 per cent year-on-year (y-o-y) in November 2021, on the back of increments of 11.3 per cent in the manufacturing index, 5.1 per cent in the electricity index, and 3.7 per cent in the mining index.
MIDF Research said the strengthening of IPI growth is “an encouraging development, signalling Malaysia’s gross domestic product (GDP) would rebound to positive growth in the fourth quarter of 2021 (Q4 2021) and will continue in 2022.”
“The reopening of the economy and the relaxation of lockdown restrictions point towards a better demand outlook going forward,” it said in a research note today.
Although there are challenges from pandemic-related supply constraints, material shortages and rising production costs, MIDF Research expects local producers to take the opportunity to increase supply in anticipation of continued recovery in domestic spending and growing external demand.
It also noted that the latest manufacturing Purchasing Managers Index (PMI) also indicated stronger expansion in manufacturing activities in December 2021 as PMI rose to an eight-month high of 52.8.
On the employment rate, Malaysia’s labour market has improved further to reach a six-month high as the working force for November 2021 expanded by 2.7 per cent y-o-y while unemployed persons fell 9.2 per cent, the largest contraction rate since June 2021.
“The improvement of the labour market was in line with the reopening of economic activities and relaxations of containment measures which started in late September 2021,” it said.
However, the manufacturing employment share remains below 15 per cent despite robust exports growth.
“The average manufacturing employment growth for the eleven months of 2021 (11MCY21) was 0.9 per cent y-o-y against the national average at 1.6 per cent y-o-y.
“By share, manufacturing contribution to national employment was at the lowest point, 14.5 per cent for the 11-month period in 2021 against 15 per cent in 2015,” it noted.
Moving forward, MIDF Research is predicting Malaysia’s unemployment rate to trend lower this year, averaging at 4.0 per cent, underpinned by a further recovery in the domestic economy, continuous upbeat momentum in global trade, and elevated commodity prices.
“With a higher vaccination rate, hospitalisation and death rates remain on declining trends while the positivity rate has plateaued at around 3 per cent since late last year, so we do not expect Malaysia to face tight restriction measures such as a lockdown in 2022 which will affect domestic economic growth and recovery in the labour market,” it said. — Bernama
