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Malaysia industrial production likely to expand robustly in November on surge in export sales

Malaysia industrial production is expected to register a robust expansion of 6.5 percent y/y in November, expanding up from 4.2 percent in October. This strong reading should come in the wake of recent surge in export sales.

Exports staged a strong rebound in November. Sales were up by 7.8 percent y/y, led by shipments of electrical and electronic products, and palm oil and palm-based goods. While the latter reflects the recovery in commodity prices, the former was driven by the pick-up in global electronics cycle amid stronger consumption growth in the US, noted DBS Group Research.

We expect that the stronger industrial production will support the growth in gross domestic product (GDP). Base effects, currency fluctuations, seasonal factors and restocking of inventory all have a tendency to distort export figures.

But industrial output growth matters more to manufacturing sector performance and consequently on GDP growth. As long as IPI continues to march north, we can expect improvement in GDP growth.

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