Jan 2024 saw rebounds in Industrial Production Index and Crude Palm Oil output plus sustained Distributive Trade Index growth momentum. Based on these indicators, Maybank IB says it estimates the economy grew +4.0% YoY in Jan 2024, supportive of its expectation of growth pick up in 2024 to +4.4%.
Based on the latest DOSM report, manufacturing and commodity output rebounded amid sustained domestic trade… Industrial Production Index (IPI) rebounded by +4.3% YoY in Jan 2024 on expansions in all sectors i.e. manufacturing, mining and electricity.
The rebound in manufacturing was supported by the turnaround in export oriented industries after seven months of declines, on the back of higher output of Rubber Products, Plastic Products, Chemicals & Chemical Products and Computer, Electronics & Optical Products, adding to the sustained growth in domestic-oriented industries such as Motor Vehicles, Trailers & Semi-Trailers, Fabricated Metal Products except Machinery & Equipment Products and Food Processing Products.
Mining output growth strengthened reflecting the uptrends in crude oil & condensate and natural gas. Crude Palm Oil (CPO) output growth also recovered from the prior month.
Distributive Trade Index (DTI) growth momentum was sustained on the back of faster volume growth in motor vehicles trade and wholesale trade vs the moderation in retail trade which Maybank IB expects to be lifted in Feb-Mar 2024 by the holiday, going back to school and festive spending, as well as the disbursements of the special one-off incentive of between MYR1,000 to MYR2,000 to Government employees and pensioners plus the first tranche of cash handouts to lower income households (where the full-year allocation was raised by +25% to MYR10b from MYR8b under Budget 2024). … suggesting firmer monthly GDP growth in Jan 2024
Based on the above performance of IPI, DTI and CPO (which constitute 52% of GDP) the house said based in its monthly GDP tracker estimated the economy grew +4.0% YoY in Jan 2024 (Dec 2023: +1.4% YoY; 4Q 2023: +3.0% YoY). Together with other indicators like the rise in manufacturing PMI and Jan 2024’s export rebound after 10 straight months of decline amid the global tech cycle recovery, these green shoots of economic growth pick up are supportive of its 2024 GDP growth forecast of +4.4%.
