Malaysia's Industrial Sector To Thrive In 2024 – PIVB

Malaysia's industrial sector is set to maintain its upward momentum in 2024, buoyed by strong domestic demand and a gradual global market recovery, Public Investment Bank Bhd (PIVB) said.

The country's Industrial Production Index (IPI) rose by 5.3% year-on-year (y-o-y) in July, up from 5.0% y-o-y in June, driven by robust growth in the manufacturing sector.

In a research note, the investment bank highlighted that July's manufacturing output was supported by gains in both domestic- and export-oriented industries, signalling a balanced contribution to the sector's performance.

Citing World Semiconductor Trade Statistics (WSTS) data, PIVB noted the global semiconductor market is forecast to grow by 16% y-o-y in 2024, with an additional 12.5% increase expected in 2025.

PIVB said these optimistic projections paint a favourable picture for Malaysia, where the electrical and electronics sector-which accounts for more than 40% of total exports-continues to be a key driver of growth.

"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% y-o-y in 2024, underpinned by a recovery in global demand and a robust electronics sector," the bank said.

Meanwhile, global goods trade continued its recovery into the third quarter of 2024, building on momentum from earlier in the year after a weak 2023, according to the latest World Trade Organisation (WTO) goods trade barometer.

"However, despite these positive trends, the WTO cautions that the outlook for global trade is fraught with uncertainties stemming from geopolitical tensions, regional conflicts, evolving monetary policy stances in advanced economies, and softening export orders.

"The upcoming WTO trade forecast, due in mid-October, is anticipated to provide a more detailed assessment of these headwinds and their potential impact on trade dynamics in the months ahead,” it added.