Malaysia: Industrial Production Growth

I think this is somewhat significant.

The Business Times Singapore has reported today(11 December 2009) that industrial production for Malaysia grew 0.7 per cent in October, the first expansion after 13 consecutive months of contraction. This was mainly on the back of increases in manufacturing activities and electricity output.

The earlier than expected turnaround coupled with the 1.7 per cent growth in October exports point to a recovery that is under way, economists said.

“We’re now back to pre-crisis level,” opined RAM Holdings chief economist Yeah Kim Leng who had been expecting a rebound in December.

He attributed the boost in manufacturing to a combination of recovery in exports and improving domestic confidence which had in turn led to stronger consumer spending.

Manufacturing output rose one per cent in October from a year ago and 7 per cent from September. For the cumulative 10 months, it was nearly 13 per cent lower compared to the same period in 2008.

The value of manufacturing sales in October was 3.7 per cent lower at RM44.6 billion compared to the same time last year. But it was 9.3 per cent higher than in September.

The number of people employed in the sector in October came to 939,351 or a slight 0.2 per cent increase of 1,924 workers. Compared to October 2008, the number is down by about 49,000 or 5 per cent.

Electricity output registered a strong 13.4 per cent gain, reflecting the stronger demand from the manufacturing and services sectors. It was 7.7 per cent higher than in September.

Yeah has projected fourth-quarter gross domestic product (GDP) growth of 2-3 per cent but, given that the economic momentum has been more robust that predicted, now thinks there could be further upside.

“The global slump in demand has eased considerably to the extent that stronger domestic demand together with export recovery has resulted in economic growth turning positive.”

The economy had shrunk by a smaller than expected 1.2 per cent in the third quarter after contracting 3.9 and 6.2 per cent in the second and first quarter, respectively. The government has stated that it would continue with its stimulus and plans to inject RM1 billion monthly into the economy until the end of 2010.

Last year, in response to the global financial crisis, it had pledged RM67 billion to stave off a greater recession, but hopes to see the private sector take up the slack next year so that some pressure can be taken off its balance sheet.

My Comments:

Unless there are motivating factors to promote private sector growth, I would not put too much of my chips on the profit-oriented private sector. No one wants to do 'national service' unless there is a considerable trade off in the balance.