Malaysia Sees Slowdown in Industrial Output Growth
(MENAFN) Malaysia’s industrial output faces mounting pressure as economists warn that escalating global trade tensions could further weigh down growth, following a tepid 2.2% expansion in the country’s Industrial Production Index (IPI) for the first half of the year.
RHB Investment Bank highlighted in a recent report that rising global protectionism—particularly the United States' proposed 100% tariff on semiconductors—threatens to undermine Malaysia’s heavily export-reliant sectors.
"Potential slower growth in major economies and persistent tariff tensions, especially following the end of the pause period, pose a significant impact on Malaysia's trade and manufacturing sector outlook, reinforcing our cautious stance," said the research house.
Echoing similar concerns, MBSB Research upheld its forecast for Malaysia’s IPI to slow to 2% in 2025, factoring in the anticipated effects of elevated tariffs on global trade activity.
"Earlier front-loading and growing domestic demand will still keep IPI growth in the positive," it stated, pointing to robust local consumption and business momentum as key offsets to external drag. The firm anticipates that domestic demand and business activity will continue to fuel production of locally-oriented goods.
On the international front, manufacturers and exporters are expected to tread cautiously, responding to the dual risk of shrinking demand and costlier imports driven by trade friction and economic slowdowns in major economies.
Meanwhile, Kenanga Research flagged renewed uncertainty over the U.S. administration’s latest tariff threat targeting microchip and pharmaceutical imports.
Still, it stood by its full-year manufacturing growth estimate of 3.9%, underpinned by solid domestic demand.
"Domestic-oriented manufacturing is expected to stay resilient, supported by continued public spending and steady domestic demand," the firm noted.
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