Published September 11, 2009

M'sia industrial output falls the least in 8 mths

July production at factories, utilities, mines down 8.4%

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(KUALA LUMPUR) Malaysia's industrial production fell the least in eight months in July as the global recession eased and overseas demand for goods improved.

Production at factories, utilities and mines dropped 8.4 per cent from a year earlier, after decreasing a revised 9.5 per cent in June, the Putrajaya-based Statistics Department said yesterday. That compares with the median forecast for a 10.5 per cent decline in a Bloomberg News survey of 15 economists. Output climbed 7.1 per cent in July from June.

Exports of Malaysian Pacific Industries Bhd semiconductors and other goods rose 8.4 per cent in July from the previous month as a slump in sales of electrical and electronics products eased. South-east Asia's third-largest economy, which entered a recession last quarter, is forecast by the government to resume growth at the end of this year.

'The contractions in economic activities and the down cycle in output for Malaysia is probably stabilising already,' said Patricia Oh, an economist at TA Securities Holdings Bhd in Kuala Lumpur. 'There may be a time lag in terms of a complete turnaround in the economy and improvement in productivity levels due to the cautious behaviour in hiring.'

Malaysia's central bank kept interest rates unchanged for a fourth straight meeting in August after cutting borrowing costs by 1.5 percentage points from November to February to revive growth.

Governor Zeti Akhtar Aziz said the government will revise its forecast for a contraction of 5 per cent in gross domestic product this year when it presents the 2010 budget in October, to reflect the improvement in the economy.

Malaysia attracted about US$3 billion in approved manufacturing investments in the first half of 2009, compared with US$13.3 billion for all of 2008, Trade Minister Mustapa Mohamed said last month. The total this year will probably be about half of last year's level and investment may not pick up before 2010, he said.

Malaysia's manufacturing output shrank 12 per cent in July, the smallest drop since November, yesterday's report showed.

Mining slid 1.9 per cent, while electricity production gained 3.1 per cent, climbing for a second month. Overall industrial production contracted 12 per cent in the first seven months of the year. -- Bloomberg