KUALA LUMPUR (June 11): The 4% growth on Industrial Production Index (IPI) year-on-year (y-o-y) was better than expected, beating market consensus, as well as its own estimates, said RHB Research in a note this evening. 

The research house said while April IPI’s performance was indicative of a resilient and diversified economy, it was important to note that the pick up in Malaysia’s industrial activities occurred before the US raised tariffs further to 25%, from 10% previously, on US$200 billion worth of Chinese imports on May 10.

RHB Research said the index’s growth in April was above Bloomberg’s consensus of 2.5% and its own in-house estimate of 2.4% — with the growth mainly led by a rebound in mining activity and broad-based acceleration in manufacturing activity — which was in turn buoyed by both export and domestic-oriented production.

The research house said it was maintaining its growth project for the economy on account of slowing global growth and weak external demand. RHB Research forecasts GDP growth at 4.6% in 2019.

“Despite the relative resilience of the Malaysian economy, further downside risks still persist from a protracted US-China trade war,” RHB Research said.

The Statistics Department said the growth seen in Malaysia’s IPI was driven by increases in all three of the index’s components.

The index’s electricity and manufacturing segments rose 5.8% and 4.3% — with the mining segment increased by 2.3%.

The department said sub-sectors that drove growth in the manufacturing segment were the transport equipment and other manufactures products; electrical and electronics products; as well as petroleum, chemical, rubber and plastic products, which rose 7.2%, 4.1% and 3.6% respectively.

The 2.3% increase in mining sector output seen in April 2019 – which is the highest growth since September 2017 – was driven by the natural gas index growing 6.1%.

In contrast, the crude oil index declined by 1.9%.

For the period between January to April 2019, the IPI grew 3% on the back of a 5.8% growth in the electricity sector, and 4.1% growth in the manufacturing sector.

However, the mining sector declined by 0.9% during the period.