KUALA LUMPUR, May 3 — MIDF Research expects the stronger demand from China to help support regional trade and production activities for Malaysia’s Manufacturing Purchasing Managers’ Index (PMI) going forward.

However, the research house said the outlook may be constrained by slowing global growth.

“We noticed the contractionary trend in April 2023 where PMIs were mostly for countries with electrical and electronics (E&E) or tech-focused manufacturing, including Malaysia, signalling the slowing external demand on the back of sluggish global demand due to the still limited impact from China’s economic recovery,” it said in a note today.

Yesterday, S&P Global noted that the latest data on the Malaysian manufacturing sector showed mixed trends at the start of the second quarter, with overall demand conditions remaining subdued despite improvement in exports.

It said the seasonally adjusted Malaysia manufacturing PMI was unchanged at 48.8 in April, signalling that business conditions remained challenging for firms.

Commenting on the latest data, MIDF Research said sector optimism remained dented, sinking to a four-month low in April 2023 given the current muted demand conditions.

“Looking at the PMI of other economies in the region, South Korea, Taiwan, and Japan also recorded contractionary manufacturing activities, while Thailand, the Philippines, India and Indonesia recorded expansion,” it said.

Nevertheless, Kenanga Research believed the manufacturing activity could sustain a moderate recovery in the coming months, backed by the resilient domestic-oriented sector.

“Against this backdrop, we project a 5.1 per cent gross domestic product (GDP) growth in the first quarter of 2023, with 2023 GDP growth to settle at 4.7 per cent, driven mainly by domestic demand and policy measures under Budget 2023,” it said, adding that this would be further boosted by contributions from higher foreign tourist arrivals and the positive effect of China’s reopening.

Meanwhile, Public Investment Bank Bhd anticipated that Malaysia’s PMI would mirror the overall trend of the global PMI and anticipated to persistently fall below the 50-point expansion threshold during the first half of 2023.

“The manufacturing industry of Malaysia is beset with headwinds as weakened global demand and shifts in the semiconductor landscape are likely to limit exports,” it said.

However, it projected that the manufacturing industry as a whole would still experience a commendable 4.4 per cent expansion in 2023, surpassing Bank Negara Malaysia’s official forecast of 4.0 per cent. — Bernama