KUALA LUMPUR (June 11): Malaysia’s Industrial Production Index (IPI) slumped 32% year-on-year (y-o-y) in April, as the Movement Control Order (MCO) slowed economic activities, the statistics department said today.

This is the sharpest decline on record as most manufacturing plants were forced to temporarily shut due to the MCO.

The statistics department's chief statistician Datuk Seri Mohd Uzir Mahidin said the fall was due to the significant decline in all three main indices, namely manufacturing (down 37.2%), mining (down 19.6%) and electricity (down 19.2%).

The sharp decrease in the manufacturing index was contributed by the significant drop in non-essential services industry and the low of capacity utilisation below 50%, he said in a statement.

The decline in the manufacturing sector, meanwhile, was mainly weighed down by the drop in the export-oriented industries, he said.

According to the department, the manufacturing sector recorded a 4.1% decline in March.

It said the main sub-sectors contributing to the decrease in manufacturing were non-metallic mineral products, basic metal and fabricated metal products (down 62.7%), electrical and electronics products (down 34.1%) and petroleum, chemical, rubber and plastic products (down 21.4%).

As for the mining sector, the deterioration was contributed by the decrease in the crude oil and condensate index (down 20.2%) and the natural gas index (down 19.0%).

Going forward, the department expects the IPI to improve in the coming months, as more industries were allowed to resume operations starting May. 

This view was echoed by MIDF Research, which said recovery is on the horizon in line with the easing of restrictions and opening up of the economy.

But it warned that the IPI performance may remain weak albeit at an improving rate.

The research firm has revised downward its IPI growth forecast to -5.4% by year end from the initially estimated -2.8% y-o-y. Year-to-date, MIDF said IPI contraction averaged at -7.5% y-o-y.

The downward revision was due to the larger than expected fall in April and anticipation of slow recovery amid a challenging domestic and external environment, it said.

“Covid-19, slowdown in global demand and lower global oil prices affect Malaysia’s industrial output and exports,” it noted.

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