Despite the weaker-than-expected Dec-22 IPI growth, overall IPI rose by +6.9% in 2022 which was not too far from the estimate of +7%. Production continued to grow last year after +7.2% growth in 2021 as companies ramped up production to cope with growing demand, both from domestic and export markets.
On the back of economic reopening and transitioning into the endemic phase, MIDF said it noticed 2022 IPI growth was underpinned by stronger output growth in domestic-oriented sectors, which grew faster at +12% (2021: +10.7%); in contrast to moderate output growth of +7% in export-oriented sectors (2021: 13%). For 2023, MIDF said it maintains the projection that IPI growth will moderate to +3.5%, factoring in moderation in external demand and the diminished low-base effect.
Apart from sustained rise in domestic spending, the research house foresees production will grow further on the back of improved supply conditions, easing cost pressure and better supply of foreign workers. However, it said it remains cautious that 2023 IPI outlook may be negatively impacted by a sharper-than-expected fall in global demand, prolonged high inflation, and renewed risk of supply disruptions
