KUALA LUMPUR (Aug 2): MIDF Research has maintained its forecast that Malaysia’s GDP growth will moderate at 4.2% in 2023 (2022: 8.7%), weighed down by uninspiring external trade performance as real exports of goods is predicted to contract by 2.8% (2022: +11.1).
Commenting on the Malaysian manufacturing sector moderating further at the start of 3Q2023, the research house said the pessimism among manufacturers in Malaysia and regionally, reflects persistent weakness in regional and global demand.
In an economic brief on Wednesday (Aug 2), MIDF said Malaysia’s S&P Global Manufacturing PMI recorded at 47.8 in July 2023 (June 2023: 47.7), marking 11 straight months of contraction.
It said the contraction was mainly attributable to a significant dip in new orders, as demand has consecutively paced down for the last 11 months.
The research house said client confidence remained dented in domestic and international markets, with new export orders having moderated the steepest since May 2020.
Meanwhile, production volumes were tapered down for the 12 consecutive months, reflecting the tepidness in demand conditions.
MIDF said that in the same survey, input cost inflation is at a five-month high, while output cost inflation remains unchanged.
It added that firms cited weakness in the exchange rate as one of the reasons for the rise in the cost of raw materials, although the price charged by producers remained unchanged to stimulate demand.
Delivery times saw an end to the six-month sequence of shortening lead times. Both pre- and post-production inventories also decreased, as firms scaled back input buying, said MIDF.
“Nevertheless, industries remained hopeful, registering the 25 consecutive months of optimism for future output to improve.
“Among regional peers, Japan, Korea, Taiwan and China also recorded manufacturing PMI below the 50-demarcation line,” it said.