Kuala lumpur: MBSB Investment Bank Bhd has maintained its projection that Malaysia’s Industrial Production Index (IPI) will moderate to around two per cent this year from 3.7 per cent in 2024, as exports faced slower external demand and higher United States tariffs.
According to BERNAMA News Agency, potential upsides could come from the front-loading activities ahead of the tariff hikes, stronger re-exports, and a sustained rise in domestic demand. MBSB Investment Bank noted, “We expect a sustained rise in domestic spending and local business activities to support the production of domestic-oriented products.” However, the bank remains cautious about the near-term outlook, citing concerns that further tariff hikes and a potentially sharper slowdown in external demand could dampen exports and production activities.
The Department of Statistics Malaysia (DOSM) reported that Malaysia’s IPI expanded by 4.9 per cent year-on-year in August 2025, supported by a relatively stable performance in the mining sector. Chief statistician Datuk Seri Dr Mohd Uzir Mahidin highlighted that the expansion was driven by strong growth in the mining sector, which rose 16.8 per cent, followed by a 2.8 per cent increase in manufacturing output.
Meanwhile, Kenanga Investment Bank Bhd expects growth in the third quarter of 2025 to reach four per cent, slightly above the previous quarter’s 3.9 per cent, in line with the September Manufacturing PMI, which registered 49.8, indicating steady activity. However, Kenanga predicts modest expansion in the fourth quarter of 2025 due to slower external demand, largely impacted by higher US tariffs.
Kenanga Investment Bank anticipates that domestic demand will continue to support domestic-oriented industries amid sustained local activity. Nonetheless, the bank warns of downside risks stemming from US President Donald Trump’s trade stance and ongoing US-China tensions. Kenanga has maintained its 2025 gross domestic product forecast at 4.3 per cent, while acknowledging that a stronger-than-expected growth in the third quarter may provide some upside support to full-year growth.