KUALA LUMPUR: Hong Leong Investment Bank (HLIB) Research maintained its 2023 gross domestic product (GDP) forecast at 3.8 per cent year-on-year (YoY), as a better-than-expected performance in the industrial production index (IPI) among a slew of other data, failed to convince that the economy is on the mend.
The IPI Index measures levels of production and capacity in the manufacturing, mining, electric, and gas industries.
The IPI grew 0.7 per cent in July driven by a surpise rebound in mining production and continued growth in electricity production, even with a continued decline in manufacturing production (-0.2 per cent YoY).
The growth beat consensus expectation of a 0.2 per cent decline.
"While upside risk to growth may realise from stronger tourism activity and electric and electronics (E&E) recovery, growth is still expected to slow in the near term in view of the weak external environment," HLIB Research said.
On the global front, global manufacturing Purchasing Manager's Index rose to 49.0 in Aug (Jul: 48.6), albeit still in the contractionary territory.
On the supply side, smoother supply chain and backlog of work kept losses to minimum. Nevertheless, new orders continued to decline, driven by a further deterioration in global trade flows.