KUCHING: The Industrial Production Index (IPI) between January and October this year rose by 2.4 per cent to 115.4 from 112.7 in the same period last year, the Statistics Department said yesterday.
The expansion was contributed by increases in the manufacturing, electricity and mining indices.
The manufacturing index rose 2.8 per cent to 126.3 between January and October from 122.8 in the same period last year, the department said in a statement.
The electricity Index was up 5.3 per cent to 136.9 in the January to October period this year from 130 in the corresponding period last year, while themining index rose 0.5 per cent to 88.8 between January and October from 88.4 in the 10 months of 2012.
As for October 2013, the IPI was up by 1.7 per cent vis-a-vis the same month last year due to increases in the manufacturing and electricity indices.
In analysing these statistics, RHB Research Institute Sdn Bhd (RHB Research) expected real exports to pick up pace to a positive 4.5 per cent in 2014, after bouncing back to grow by an estimate of 0.2 per cent in 2013.
“This is also in tandem with a pick-up in global trade volume, which is projected to grow at a faster pace of 4.9 per cent in 2014, after inching up to plus 2.9 per cent estimated for 2013,” it added in a note on the IPI.
“Already, global semiconductor sales strengthened to 8.7 per cent y-o-y in September, the strongest growth in more than two years and up from a low of positive 1.2 per cent in May.”
RHB Research also envisaged domestic demand to remain resilient and act as a main engine of growth for the economy in 2014.
“Indeed, we expect domestic demand to expand at a reasonably strong pace of seven per cent during the year, albeit at a more moderate pace compared with plus 7.9 per cent estimated for 2013, on the back of a sustained increase in private investment and resilient consumer spending,” it added.
After expanding at a relatively strong pace of +7.2 per cent estimated for 2013, consumer spending is projected to grow at 6.0 per cent in 2014.
Despite a more moderate pace of growth, it is still commendable and growth of consumer spending will likely be supported by rising consumerism, high savings and favourable labour market conditions.
In addition, the government has proposed to increase the 1Malaysia People’s Aid (BR1M) for the low-income group of the population and extend it to cover households earning between RM3,000 to RM4,000 with a higher allocation of RM4.6 billion in the 2014 Budget, up from RM3 billion in 2013.
“In the same vein, the implementation of a minimum wage policy for smaller companies effective January 1, 2014 will help increase consumers’ disposable income, while the full impact from the salary increment for civil servants for the year 2014 that has been brought forward to 1 July 2013 will likely be felt as well during the year.
“Also, consumer spending will likely pick up towards the end of the year, ahead of the implementation of Goods & Services Tax in April 2015,” RHB Research added.
“Nevertheless, the upside to consumer spending will likely be capped by the Central Bank’s moves to rein in household debt, while further fuel prices hike would also hurt consumer sentiment somewhat.”