KUALA LUMPUR: Malaysia's industrial sector is anticipated to continue its growth momentum throughout the rest of 2024, driven by steady domestic demand and a recovery in global markets, according to Public Investment Bank Bhd (PublicInvest).
This follows a 5.0 per cent year-on-year (YoY) increase in the country's Industrial Production Index (IPI), up from 2.4 per cent YoY in May, marking the sixth consecutive month of positive growth.
"This growth slightly surpassed market expectations of 4.7 per cent, driven by stronger output in the manufacturing sector (+5.2 per cent YoY) and the mining sector (+4.9 per cent YoY), while the Electricity sector also contributed with a 3.5 per cent YoY increase," it said.
Nevertheless, the firm noted that the sector's outlook is still dependent on external demand factors, which represent a major risk to Malaysia's industrial performance amid continuing global uncertainties.
On the semiconductor note, global semiconductor industry sales jumped 18.3 per cent YoY and 6.5 per cent quarter-on-quarter (QoQ), which signals a strong recovery.
The World Semiconductor Trade Statistics (WSTS) predicts a 16 per cent YoY growth for the global semiconductor market in 2024, followed by a further 12.5 per cent growth in 2025, potentially reaching an estimated US$687 billion.
"The anticipated uptick in electronics exports, bolstered by favourable base effects, is likely to cushion some of the adverse impacts on Malaysia's trade outlook.
"We project Malaysia's exports of goods and services to grow by 5.4 per cent YoY in 2024, underpinned by a recovery in global demand and a robust electronics sector," said PublicInvest.
At the same time, the firm noted that global gross domestic product (GDP) growth is anticipated to reach 3.0 per cent in 2024, creating a favourable external environment.
"Malaysia's high trade openness, as reflected in a merchandise trade-to-GDP ratio of 144.7 per cent in 2023, underscores its vulnerability to global economic cycles, making these projections critical to the country's economic trajectory," it said.