KUALA LUMPUR, Feb. 8 (Xinhua) -- Economists have foreseen Malaysia's industrial production index (IPI) to gain momentum in 2024, in tandem with rosier trade prospects and improved investment appetite.
According to RHB Investment Bank, investment appetite is improving, as indicated by a rising trend of capital and intermediate goods imports coupled with improvement in manufacturing Purchasing Managers' Index (PMI) for January.
"This might be early signs of bottoming out, suggesting that the manufacturing sector is on the course of recovery," it said.
Moving forward, it noted that the manufacturing sector is expected to be buoyed by global trade recovery.
MIDF Research also said in a note that it sees Malaysia's IPI growth to strengthen to 3.7 percent in 2024, from 1.1 percent in 2023.
According to the research house, moderate IPI growth in 2023 was expected due to weakness in trade-oriented industries.
"For 2024, we foresee a recovery in external demand and global manufacturing activities will support Malaysia's IPI to grow stronger," it said.
It noted that continued growth in domestic demand will also support IPI growth this year.
"We are optimistic looking at the stabilization in manufacturing activities in January 2024 as reported by the recent PMI reports," it added.
However, it is still concerned that IPI growth this year may be weighed down by downside risks such as possible recession in the United States.
Moreover, it said companies may relook at production plans if global trade activities are affected by worsening geopolitical tension and disruptions to trade flows.
TA Securities also anticipates a positive trajectory for IPI in 2024.
The research house projected that a recovery in external demand coupled with global manufacturing activities will fortify Malaysia's IPI, leading to a growth range of 3.5 percent to 4.5 percent.
According to TA, the sustained expansion of domestic demand is expected to further contribute to the overall IPI growth this year.
However, it said the performance of IPI may face challenges from prolonged or exacerbated overseas demand constraints. ■