KUALA LUMPUR, Sept. 4 (Xinhua) -- Economists said Monday that they foresee Malaysia's manufacturing will experience further moderation.
PublicInvest Research said in a note that amid the weak external environment, Malaysia's manufacturing output is foreseen to align with the short-term cyclical downturn witnessed in the semiconductor industry, which has been persistently grappling with adverse growth conditions.
"Our projections indicate that the manufacturing sector as a whole will experience a further moderation of only 2 percent for this year as compared to 8.1 percent in 2022," said the research house.
It also foresees a parallel trajectory between Malaysia's Purchasing Managers' Index (PMI) and the broader global PMI, with the former projected to consistently register below the critical expansion threshold of 50 points for the remainder of the year.
Meanwhile, Kenanga Research said in a note that weak external demand outlook is expected to weigh on Malaysia's manufacturing activity in the near term.
The research house opined that the lower manufacturing PMI reading in August reflects a persistent weakness in the manufacturing conditions largely due to subdued demand from the external sector.
This is also partly due to the higher base effect recorded last year as the economy returned to normalcy with the absence of stimulus measures, according to Kenanga.
Likewise, the research house has revised Malaysia's 2023 gross domestic product (GDP) growth forecast to 3.5-4 percent from 4.7 percent, following a slower-than-expected GDP growth in the second quarter.
This is mainly due to the expectation of a continued slowdown in the global growth outlook and the lag effect of the higher interest rate environment led by the advanced economies, according to Kenanga.
Nonetheless, it believes Malaysia's economic growth will continue to be supported by resilient domestic demand amid steady labor market conditions and further improvement in the services sector backed by a gradual increase in tourism activities. ■
