December IPI up 4.8%, may lead to higher GDP

PETALING JAYA: Malaysia’s industrial production rose 4.8% in December led by a 6.8% jump in manufacturing output, signalling that the expansion in the real economy is still intact despite turbulence in the financial markets.

The manufacturing sector grew at its fastest pace in 13 months, according to the Department of Statistics (DOS) yesterday, as factories ramped up production to meet strong export demand from developed economies.

The Government had said that exports hit RM65.7bil in December, the second highest after the record RM67.1bil reported in October.

Economists said sturdy growth in the manufacturing sector and exports would provide the boost for the economy to exceed forecast.

Bank Negara is expected to announce the gross domestic product (GDP) figures for the fourth quarter and the full year tomorrow.

“We are expecting the economy to grow close to 5% in the fourth quarter on strong manufacturing sector and exports, supported by the domestic demand,” said RAM Holdings group chief economist Dr Yeah Kim Leng.

Growth in the manufacturing sector was driven by sustained recovery in electronics and electrical products, refined petroleum products, transport equipment and building materials.

But while the industrial production growth in the fourth quarter at 3.4% was a tad slower compared to 3.7% achieved in the third quarter, CIMB Research economist Lee Heng Guie believed that GDP expansion in the fourth quarter would quicken to 5.3% from 5% recorded in the third quarter.

“Our 2014 growth estimate of 5% is backed by domestic demand and higher exports,” Lee said.

The higher factory output also contributed to the increased sales value of the manufacturing sector by 5.4% to RM55.4bil in December compared with RM52.6bil a year ago.

For the full-year, sales value increased 0.2% to RM624.4bil, with 1.2% increase in the number of employees engaged in manufacturing sector, according to DOS.