Kuala lumpur: Kenanga Investment Bank Bhd (Kenanga IB) is maintaining its 2025 manufacturing growth forecast for Malaysia at 3.9 per cent, down from 4.3 per cent last year, citing a cautious outlook for external trade.

According to BERNAMA News Agency, the bank, in a research note, highlighted that Malaysia’s industrial production index (IPI) rose 4.2 per cent year-on-year (y-o-y) in July 2025, compared to 2.9 per cent in June, marking the strongest growth in seven months. The surge was driven by higher manufacturing output and a rebound in the mining index, although it was partly offset by slower electricity production.

The note detailed that the manufacturing index expanded 4.4 per cent y-o-y, up from 3.6 per cent in June, propelled by robust electrical and electronic output, which increased to 8.5 per cent in July from 6.4 per cent in June. The mining index rebounded sharply to 4.3 per cent in July, following three consecutive months of declines, supported by a recovery in crude petroleum and condensate, and stronger natural gas output.

On the outlook, Kenanga IB remarked that July’s gains indicate a strong start for the third quarter of 2025 (3Q 2025), partly attributed to frontloading ahead of the US tariffs imposed in August. Concurrently, the latest manufacturing purchasing managers’ index (PMI) suggests improved manufacturing activity, with the index reaching its highest level since June 2024.

The investment bank noted that these developments should bolster overall gross domestic product (GDP) growth and help mitigate an anticipated slowdown in the final quarter of 2025. However, risks remain due to trade tensions, particularly those involving the US, China, and other global players, which could impact the global trade landscape.

In conclusion, Kenanga IB reaffirmed its 2025 GDP growth projection at 4.3 per cent, compared to 5.1 per cent last year, while emphasizing the importance of resilient domestic demand in sustaining growth.