In a statement, it said the IPI growth transitioned into positive terrain, rising to 4.3% year-on-year (y-o-y) in January from a prior reading of -0.03% y-o-y in December 2023, higher than the market projection of 2%, despite continued challenges stemming from diminishing foreign demand.
Therefore, it stated that the growth prospects for the industrial sector will improve this year.
“The 2024 global semiconductor market anticipates a robust recovery with a projected double-digit growth rate of 13.1%, surpassing earlier estimates of 11.8%.
“This bodes well for Malaysia’s manufacturing sector and the semiconductor industry worldwide, particularly for major electrical and electronics (E&E) exporters like Malaysia, wherein this segment’s product exports contribute over 40% to total gross exports,” it said.
For 2024, the finance ministry expects a significant 5.5% increase in manufactured goods exports, bolstering positive sentiment.
“However, Malaysia remains susceptible to global economic fluctuations, especially in electronics and semiconductor sectors, amid modest global economic growth projections for 2024.
“Heavy reliance on key trade partners such as the US, China, and the EU raises concerns for Asean trade, compounded by the impact of major elections in key trading partners like the US, South Korea, and India,” it stated.
On top of that, it said the Red Sea crisis escalation poses a significant threat to global supply chains and business costs.
“Despite these risks, an anticipated rise in electronics exports and favourable base effects could partially mitigate negative impacts, with Malaysia’s exports of goods and services forecast to rebound by 5.4% in 2024,” it said.
Meanwhile, Hong Leong Investment Bank Bhd said it expects Malaysia’s manufacturing activity to gradually gain momentum as trade activity recovers as the global manufacturing Purchasing Managers’ Index has crept back into expansionary territory in February.
“This is also in line with the latest uptrend in Malaysia’s manufacturing capacity utilisation rate of 79.8% in the fourth quarter of 2023 compared with 79.4% in the third quarter of 2023,” it said.