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Strong Rebound in IPI Reflects Further Resumption Of Economic Activities - RHB Research

The strong rebound of Malaysia’s Industrial Production Index (IPI) in June reflected the further resumption of economic activity under the Recovery Movement Control Order, said RHB Research.

Production "potentially” also took advantage of pent-up demand, which was expected to be temporary, the research house said.

Growth, however, was still well below the pre-pandemic average of around 3.5 percent y-o-y (2016-2019), with much of it being dragged by a relatively weaker rebound in oil and gas production,” it said in a note.

Earlier today, the Department of Statistics Malaysia (DoSM) reported that the IPI in June, which shrank 0.4 per cent year-on-year (y-o-y), surged 26.2 percent from May after the government allowed more industries to resume operations from May onwards. In May, the IPI fell 22.1 percent y-o-y.

DoSM said the slight y-o-y drop in June IPI was due to the decline in the mining index (-17.1 percent) and electricity index (-2.4 percent), while the manufacturing index increased 4.7 percent.

He said the increment of IPI in June 2020 was due to an increase in all indices, with manufacturing index rising 36.8 percent, mining index 2.4 percent and electricity index 0.2 percent.

Source: The Edge Markets

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