This article first appeared in The Edge Financial Daily on October 12, 2018

KUALA LUMPUR: Malaysia’s Industrial Production Index (IPI) grew at a slower pace of 2.2% year-on-year (y-o-y) in August, on the back of weaker manufacturing activities.

The IPI increased 2.6% y-o-y in July.

In a statement yesterday, the Department of Statistics Malaysia said the manufacturing sector output slowed in August to 4.3% y-o-y after recording a growth of 5.2% y-o-y in July. “The increase in manufacturing output was driven by major sub-sectors: electrical and electronic equipment products (4.5%), petroleum, chemical, rubber and plastic products (3.5%) and non-metallic mineral products, basic metal and fabricated metal products (4.9%),” it said.

Electricity output rose 4% in August, following an increase of 4.5% in July. Meanwhile, the mining sector’s output registered a decline of 4.6% y-o-y in August. The decline was contributed by decreases in the natural gas index (-8%) and the crude oil index (-0.6%), the department said.

In a note, RHB Economic Research economist Vincent Loo expected Malaysia’s economy to grow at a slower pace of 5% this year and 2019, from 5.9% in 2017, as he anticipated a slowdown in external trade. “But this is likely to be cushioned by healthy domestic demand,” he added.