The month of February saw slower growth in Industrial Production Index (Feb 2024: +3.1% YoY; Jan 2024: +4.3% YoY) and Crude Palm Oil output (Feb 2024: +0.5% YoY; Jan 2024: +1.6% YoY) but faster growth in Distributive Trade Index (Feb 2024: +3.9% YoY; Jan 2024: +3.5% YoY).
Maybank Investment Bank (Maybank IB), in its Malaysia Monthly GDP Estimate, Feb 2024 release today (Apr 9) said based on these indicators, they estimated the Malaysian economy grew +3.3% YoY in Feb 2024 (Jan 2023: +4.0% YoY) and +3.7% YoY in 2M 2024 (4Q 2023: +3.0% YoY), supportive of their forecast of growth pick up in 2024 to +4.4% (2023: ECONOMICS +3.7%).
Slower manufacturing production, mixed commodity output, firmer domestic trade…
Industrial Production Index (IPI) eased to +3.1% YoY in Feb 2024 (Jan 2024: +4.3% YoY) as slower growth in manufacturing (Feb 2024: +1.2% YoY; Jan 2024: +3.7% YoY) countered faster growth in mining (Feb 2024: +8.1% YoY; Jan 2024: +5.0% YoY) and electricity (Feb 2024: +10.9% YoY; Jan 2024: +8.3% YoY).
In view of the shorter working month in Feb 2024 due to the Lunar New Malaysia Year holiday, slower manufacturing growth reflected decline in export oriented industries (Feb 2024: -0.1% YoY; Jan 2024: +1.6% YoY) like Chemicals & Chemical Products (Feb 2024: -2.8%; Jan 2024: +6.1% YoY), Vegetable & Animal Oils & Fats (Feb 2024: -13.5% YoY; Jan 2024: -2.6% YoY) and Electrical Equipment (Feb 2024: -2.2% YoY; Jan 2024: +1.4% YoY), plus slower growth in domestic-oriented industries (Feb 2024: +3.8% YoY; Jan 2024: +8.0% YoY) such as Food Processing Products (Feb 2024: +0.4% YoY; Jan 2024: +8.5% YoY), Basic Metals (Feb 2024: +1.4% YoY; Jan 2024: +2.6% YoY) and Motor Vehicles, Trailers & Semi-Trailers (Feb 2024: +2.9% YoY; Jan 2024: +12.1% YoY).
Mining output growth picked up on higher natural gas production (Feb 2024: +11.9% YoY; Jan 2024: +6.6% YoY) amid sustained crude oil & condensate output growth (Feb 2024: +2.5% YoY; Jan 2024: +2.6% YoY) output. Meanwhile, production of another major commodity – crude palm oil – slowed (Feb 2024: +0.5% YoY; Jan 2024: +1.6% YoY).
Distributive Trade Index (DTI) posted firmer growth (Feb 2024: +3.9% YoY; Jan 2024: +3.5% YoY) on pickups in the volumes of retail trade (Feb 2024: +4.6% YoY; Jan 2024: +1.5% YoY) and wholesale trade (Feb 2024: +4.3% YoY; Jan 2024: +4.0% YoY) amid softer growth in motor vehicles trade volume (Feb 2024: +2.6% YoY; Jan 2024: +12.1% YoY).
The pick up in retail trade volume was in line with Maybank IB’s expectations of firmer consumer spending in Feb-Apr 2024 driven by school holiday season, going-back-to-school and festive (Ramadhan & Eid) spendings, as well as disbursements of the special one-off incentive of between MYR1,000 to MYR2,000 (Feb 2024) – plus additional MYR500 and MYR250 (5 Apr 2024) – to Government employees and pensioners respectively, plus the first two tranches of cash handouts to lower income households in Feb 2024 and Apr 2024 (i.e. full year allocation was raised by +25% to MYR10b from MYR8b under Budget 2024).
… suggesting firmer 1Q 2024 GDP growth
Maybank group chief economist Suhaimi Ilias said based on the above performance of IPI, DTI and CPO (which constitute 52% of GDP) their monthly GDP tracker estimated the economy grew +3.3% YoY in Feb 2024 (Jan 2024: +4.0% YoY) to average +3.7% in 2M 2024 (4Q 2023: +3.0% YoY), signalling firmer economic growth in 1Q 2024 as well as being supportive of the bank’s 2024 GDP growth forecast of +4.4% (2023: +3.7%).
