It has been driven by the continuing decrease in the mining sector and crude palm oil.
Industrial production growth in Malaysia has slowed to 2.4% YoY in Q3 from 2.8% in Q2 on the back of a steady decline in mining sector output, according to a report by Maybank.
Mining output decreased for the fifth straight month to 6.2% YoY in September.
“The former continued to be impacted by disruption in East Malaysia’s of natural gas production which is only expected to normalise by 2Q 2019 at the earliest,” Maybank analyst Suhaimi Ilias said.
The worsening performance of the mining sector is offset by steady growth in manufacturing and electricity output which rose 4.8% YoY and 4.2% YoY respectively.
The manufacturing sector is supported by high amounts of electrical and electronic products, petroleum, chemical, rubber & plastic products and food, beverages & tobacco.
Analysts cited a pick-up in exports-oriented industries with a 4.8% YoY growth while domestic-oriented industries slowed at 4.1% YoY.
Crude palm oil (CPO) also dropped further from -6.4% YoY last quarter to -8.1% YoY, hinting that the agriculture GDP’s decline will go on.
Overall, Maybank’s GDP growth forecast for 2018 was cut to 4.8% from their previous prediction at 5.5%- 6.0% although economic growth is expected to edge up slightly to 4.9% in 2019.
“We expect a continuation of sub-5% growth last quarter given the uneven trends in non-services sectors noted above,” Ilias added.
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