Malaysia’s Industrial Production Holds Steady Amid Inventory Frontloading

Malaysia’s Industrial Production Index (IPI) remained firm at +3.1% year-on-year in March, matching February’s pace but slightly below consensus expectations of +3.5%. The expansion was driven by stronger manufacturing output (+5.5%) and electricity production (+4.9%), offset by continued weakness in mining (-6.5%). Petroleum and natural gas contracted on a yearly basis but rebounded month-on-month, suggesting gradual recovery.

Industrial Production

Export-oriented manufacturing rose +6.7%, supported by gains in vegetable and animal oils, machinery, and apparel, while refined petroleum products rebounded, easing concerns over domestic fuel supply. Domestic-oriented manufacturing also strengthened, reflecting resilient demand. Malaysia’s PMI climbed to a four-year high of 51.6 in April, signalling inventory frontloading as firms stockpile against supply chain risks. Analysts expect manufacturing growth to remain intact at +4.5% in 2026, with GDP forecast at +4.7%. Growth is projected to stay firm in 1H26 before moderating in 2H26 amid global uncertainties.

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