KUALA LUMPUR (July 13): AmBank Group Research said as expected, Malaysia’s industrial production (IP) grew moderately by 3.0% year-on-year (y/y) in May due to slower growth from all the sub-indices i.e. manufacturing (+4.1% y/y) and electricity (+2.6% y/y) with mining down -0.5% y/y.

In a note today, AmBank group chief economist and head of research Dr Anthony Dass said weaker growth fell in tandem with softer May’s exports and imports reported at 3.4%y/y and 0.1%y/y respectively.

Besides, the Purchasing Managers Index in May read at 47.6%, he said.

Dass said despite May numbers being a little soft, he was not too worried.

“We found the average first two months of 2Q2018 IP grew 3.8%, about the same pace as 1Q2018 though manufacturing slowed at 4.7%(5.7% in 1Q2018) while manufacturing sales grew faster by 6.9% (6.5% in 1Q2018) and exports and imports up 8.7%y/y and 4.6%y/y respectively (6.0%y/y and -0.3%y/y in 1Q2018).

“Hence, our preliminary 2Q2018 gross domestic product (GDP) estimates suggests the economy could grow between 5.5% - 5.6% with a high side of 5.7% from 5.4% in 1Q2018.

“It should bring the 1H2018 GDP to around 5.5% - 5.6%. For the full year of 2018, to maintain our base case growth of 5.5% with the lower bound pegged at 5.3%, the 2H2018 GDP needs to hover between 5.1% and 5.5%,” he said.