KUALA LUMPUR, June 4 (Xinhua) -- Economists have stayed cautious on Malaysia's manufacturing sector outlook amid heightened uncertainty over the U.S. trade policy.
TA Securities said in a note on Wednesday that Malaysia's manufacturing sector is expected to remain on a cautious footing in the near term.
According to the research house, in the absence of a meaningful recovery in global demand, particularly from advanced economies, Malaysia's industrial output and trade performance may continue to face external headwinds, especially as the temporary lift from front-loaded orders begins to fade.
A decline in business confidence and softer purchasing activity further points to subdued production momentum heading into the second half of the year, it added.
TA Securities also highlighted that overall confidence slipped to its lowest level since June 2021, reflecting heightened uncertainty over U.S. trade policy and ongoing shortages of appropriately skilled labor, which continue to weigh on the near-term outlook.
Nonetheless, it opined that sentiment within Malaysia's manufacturing sector remained broadly positive in May, with expectations of improved demand conditions underpinning projections for output growth over the next 12 months.
Meanwhile, MIDF Research also said in a note on Wednesday that it expects external demand to soften in the near term, weighing on export-oriented manufacturing activities.
"However, positive outcomes from the trade negotiations may help ease tensions and support economic activities," said the research house.
Looking ahead, it expects the manufacturing sector to grow on the back of rising domestic demand. ■