KUALA LUMPUR (Nikkei Markets) - Malaysia's industrial production growth accelerated in April thanks to gains in manufacturing activities and electricity generation, official data released Monday show.
The industrial production index -- a measure of output from mines, power plants and factories - rose 4.6% in April from a year earlier, the Department of Statistics said in a statement. That compares with March's 3.1% year-on-year growth, and a median 3.7% forecast in a Nikkei Markets poll of economists. The index rose 1.5% from March on a seasonally adjusted basis.
Economists cautioned, while export-oriented segment remained robust in April, Malaysia's economic growth could slow in the coming quarters as external demand moderates and weigh on factory activities in the trade-reliant Southeast Asian nation.
"The positive external momentum that has underpinned growth in the manufacturing sector thus far is expected to weaken as demand from major economies and the global electronics cycle normalizes," said CIMB Investment Bank's economist Michelle Chia.
Malaysia mostly relies on domestic private investment and consumer spending to power growth although strong demand for exports ranging from electronics to palm oil have provided additional boost to the third-largest economy in Southeast Asia.
However, concerns over growth have risen as policy uncertainty crept in following the Alliance of Hope's shock victory at the May 9 elections. The government has announced it would review projects to cut wasteful expenditure, while scrapping the goods and services tax to boost consumer spending.
Australia and New Zealand Banking Group Monday lowered its forecast for Malaysia's 2018 gross domestic product growth to 5.4% from 5.7%. In the first quarter, GDP growth slowed to 5.4% year-on-year from fourth quarter's 5.9%.
"It is possible that firms took a more cautious approach earlier in the year in advance of the May general election, putting off investment plans and voluntarily running down inventories," the bank wrote in a note to investors.
Further, the Nikkei Malaysia Manufacturing Purchasing Managers' Index, or PMI, has declined for the fourth straight month to hit an 11-month low, suggesting "further loss of momentum" in the second quarter, ANZ added.
Data out Monday showed output from the key manufacturing sector increased 5.3% from a year earlier, while electricity output rose 5.8% in April. The mining sector output recorded 1.8% growth year-over-year.
Output growth in export-oriented segment such as electronics and refined petroleum products has remained strong, the latest print showed. That dovetails with data released last week showing a 14% increase in Malaysia's April exports.
Manufacturing sales for April rose 8.2% on year to 65.5 billion ringgit ($16.4 billion).