Malaysia’s domestic demand likely to be weaker in 2016

Malaysia's November Industrial Production grew only 1.8% (Oct: 4.2%), well below the consensus forecast of 4.0% and Barclay's projection of 3.5%.  With mining activity accounting for most of the decline, the growth was consistent with slower export growth registered in November.

Within Industrial Production, mining growth dropped by 4.1% y/y (Oct: -1.4%), while Natural gas production plunged 8.7% y/y in November, witnessing it biggest fall.  Industrial production seasonally adjusted M/M basis, fell by 1.1% in November (Oct: -0.5% m/m).

Manufacturing growth was somewhat strong as it increased by 4.0%, lower than 6.2% growth in October.  Electronics production grew by 9.3% and food and beverages production by 4.6% Y/Y, however, with production rising only 2.0% y/y in November, power production remained subdued in H2 15.

"We continue to forecast growth of 5.0% for 2015, moderating to 4.7% in 2016. We expect domestic demand to moderate going forward, as private consumption and private investment are expected to be weaker in 2016" - Barclays