Malaysia's IPI growth in April reflects strong demand, industrial vitality

New Straits Times

12-06-2025

KUALA LUMPUR: Malaysia's Industrial Production Index (IPI) growth in April 2025, driven primarily by a robust manufacturing sector, reflects strong aggregate demand and industrial vitality, an economist said.
Juwai IQI global chief economist Shan Saeed noted that the government appears committed to maintaining macroeconomic growth stability.
"The uptick in domestically oriented manufacturing signals a strategic pivot toward internal economic resilience, underpinned by proactive government measures.
"These measures include demand-side stimulus, incentives for small and medium enterprises, and infrastructure investments – all of which reinforce domestic investor confidence and enhance productive capacity," he told Bernama.
According to the Department of Statistics Malaysia (DOSM), Malaysia's IPI rose 2.7 per cent year-on-year in April 2025, supported by a 5.6 per cent growth in the manufacturing sector.
The department stated that export-oriented industries in the manufacturing sector in April 2025 grew by 6.4 per cent compared with a 4.8 per cent growth in March 2025, while domestic-oriented industries expanded by 3.9 per cent in April 2025 versus 2.3 per cent in March 2025.
DOSM also reported that the mining and electricity sectors declined by 6.3 per cent and 1.6 per cent, respectively, in April 2025.
Echoing Shan, International Islamic University Malaysia (IIUM) associate professor of economics Dr Muhammad Irwan Ariffin, said the country's IPI growth in April 2025 is a positive sign for the economy, despite declines in the mining and electricity sectors.
"While the overall outlook remains cautiously optimistic, we must remain mindful of certain risks and challenges. The declines in the mining and electricity sectors, especially amid global trade uncertainties, could dampen growth in the coming months," he said.
Additionally, he highlighted challenges such as slower domestic consumption and potential global trade disruptions, which have led some international institutions to revise their growth forecasts for both Malaysia and the global economy.
"That said, Malaysia's favourable manufacturing performance and steady investment inflows indicate strong underlying fundamentals. If global demand remains resilient, the economy is well-positioned to navigate these challenges.
"It's important to closely monitor both domestic and external factors as they continue to shape the demand outlook for the rest of the year," he said.
Looking ahead, he expects both export-oriented and domestic-oriented manufacturing sectors to play a central role in driving positive industrial performance in the upcoming May 2025 IPI report.
"These sectors have shown resilience despite global and domestic challenges, and their continued growth is expected to significantly influence Malaysia's overall industrial output," he said.
On a global scale, Muhammad Irwan noted Malaysia's industrial growth has been relatively modest compared to regional competitors such as Vietnam and Taiwan, emphasising valuable lessons to be learned from these countries, such as improving industrial infrastructure and fostering stronger industry-academia partnerships.
Meanwhile, Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid attributed the stronger export-oriented industries in the manufacturing sector in April 2025 to front-loading activity by trading partners, particularly from the US – ahead of the anticipated tariff hikes in the second half of 2025 (2H 2025).
"This suggests a more challenging outlook for 2H 2025, as traders and investors remain cautious about tariffs and their potential impact on the economy," he said.