Malaysia's Industrial Output Up 5.8% In October

Malaysia's industrial output rose in October compared with its output in the same month last year, indicating the country’s economic condition continued to strengthen in spite of the global economic downturn.

According to data released Tuesday by Malaysia's Department of Statistics, Malaysia's industrial production index (IPI), which measures the change in the total inflation-adjusted value of output produced by manufacturers, mines and utilities, rose 5.8 percent in October compared with its output in the same period in the previous year, up from 5 percent in September and above analysts’ average forecast of 2.4 percent.

The report comes after it was announced last week that Malaysia posted a better-than-expected trade surplus in October. According to data released last week by the Department of Statistics, Malaysia’s trade surplus rose to 9.6 billion Malaysian ringgit ($3.1 billion) in October from 6.5 billion ringgit in September and above analysts’ expectations of 7.2 billion ringgit. However, exports dropped 3.2 percent in October compared with those in the same month last year, down from a 2.6 percent rise in September.

It was revealed last month that Malaysia’s economy grew at a faster-than-expected pace in the third quarter. According to data released last month by Bank Negara Malaysia (BNM), the country’s gross domestic product, which measures the annualized change in the inflation-adjusted value of all goods and services produced by the economy, was up 5.2 percent in the third quarter of this year compared with that in the second quarter. This was above analysts’ expectations of 4.8 percent, but down from a rise of 5.6 percent in the second quarter.

Last month, the BNM kept its policy rate unchanged at 3 percent as expected by analysts, who feel there is little need for the central bank to provide support in the near term since the country’s economy is performing well in spite of the global slowdown.

However, analysts are concerned that Malaysia will face risks related to the global downturn. “We expect global demand to remain lackluster throughout 2013. Eventually, that should start to take a greater toll on Malaysia’s export-dependent economy. In particular, it will be difficult to sustain an investment boom in such a poor global environment, as private investors, who account for most of the investment under the government’s Economic Transfer Program, become more cautious of investing in large-scale projects,” Capital Economics said in a note.