KUALA LUMPUR (NewsRise) - Malaysia's industrial production grew at a slower-than-expected pace in January, largely driven by higher manufacturing output, official data Monday showed.
The industrial production index - which measures output from factories, power plants, and mines - increased 3.5% in January from a year earlier, according to Department of Statistics' data. The print trailed a median 5.1% gain in a Nikkei NewsRise poll and December's 4.7% year-on-year growth.
The index contracted 4.6% in January when compared to December, and declined 1.1% month-on-month on a seasonally-adjusted basis, the department said.
Still, economists expect Malaysia's economy will likely hold up this year, backed by resilient domestic demand, although its trade-reliant sectors face downside risks from external developments.
"I won't read too much into it as other numbers, such as exports, have remained relatively supportive of growth," said Overseas-Chinese Banking Corporation's economist Wellian Wiranto. "The downside risk is still external."
Exports surged 13.6% in January from a year earlier, while imports climbed 16.1% year-on-year, data released last week showed.
Malaysia's key manufacturing sub-index rose 4.6% year-on-year, while electricity generation and mining activities gained 1.1% each in January. On a month-on-month basis, manufacturing production fell 5.3% while electricity output was down 2.0% and mining fell 3.3%.
"Overall, we remain cautious over the economic outlook as we believe electronics demand will likely fade beyond," the first half of 2017, said Nomura Securities. "Manufactured exports to the U.S. is also vulnerable to the risk from trade protectionism by the Trump administration."
The data for January is provisional and may be updated based on the latest available figures a month later.
The latest data suggests Malaysia's gross domestic product will likely expand 4.5% in the first quarter, bringing full-year growth to 4.5% in 2017, driven mostly by sustained consumer spending, said RHB Research Institute's economist Vincent Loo.
That matches a 4.5% year-on-year growth in the final quarter of 2016 and the government's estimate of between 4.0% and 5.0% for 2017.