Kuala lumpur: RHB Investment Bank Bhd (RHB IB) has revised Malaysia's 2026 Industrial Production Index (IPI) growth forecast upward to 4.9 per cent from 4.1 per cent. This adjustment reflects a stronger-than-expected 8.2 per cent year-on-year expansion in April, continued resilience in electrical and electronic (EandE) exports, and firm domestic demand, as stated in a research note by RHB IB.
According to BERNAMA News Agency, RHB IB outlined that the manufacturing sector would be supported by sustained global EandE demand, steady domestic consumption, and targeted policy measures for the remainder of the year. However, the bank remains cautious of external risks, including ongoing tensions in West Asia and potential shifts in US tariff policies. Additionally, higher commodity and energy prices could lead to increased costs in fuel, transportation, and production, thereby adding pressure to the manufacturing sector.
Domestically, RHB IB anticipates that resilient private consumption and investment will continue to bolster industrial activity, supported by steady income growth and a healthy labor market. The bank also emphasized the importance of policies that promote local production and the development of small and medium enterprises to strengthen domestic supply chains.
Further, RHB IB noted that targeted incentives for high-impact sectors such as pharmaceuticals, semiconductors, artificial intelligence (AI), digital technology, and sustainability-related industries are expected to enhance manufacturing value-added and support technological upgrading. Export-oriented industries are also expected to benefit from ongoing EandE demand, though the outlook is subject to global economic and trade developments.
RHB IB maintains a positive view of the manufacturing sector but remains attentive to geopolitical tensions and US tariff policies, as well as their potential implications for Malaysia's economy. The bank highlighted that higher energy prices could impact economic activity through increased production and transportation costs and reduced household purchasing power.
In its analysis, RHB IB pointed out that Malaysia's producer prices are sensitive to global crude oil price movements, with both short- and long-term pass-through effects. A 1.0 per cent increase in Brent crude prices is estimated to raise the Producer Price Index (PPI) by around 0.03 per cent month-on-month in the near term. Over the long term, a sustained 1.0 per cent rise in Brent prices could lead to an approximate 0.2 per cent increase in the PPI, as prolonged energy cost pressures propagate through supply chains and elevate overall production costs.