Tag: Industrial Production Index

Categories
Economics WDYT

[2822] Guess Malaysia’s 1Q16 GDP growth

I have been slacking off a little bit. My models have not been updated as frequently as it should. Reason is, one fine March day, something wiped the models out. Electrons arranged neatly disintegrated into disorder, destroying the microfoundations (heh!) of my models.

I have backup files, but updating them is a tedious exercise.

So, my projections, especially on quarterly basis might be off for now.

Nonetheless, it does not take much effort to look into the latest data.

And I cannot find much stuff to celebrate.

The full industrial production index for the first quarter is not out yet but for February, production grew only 3.9% YoY. Remember, 2016 is a leap year and in essence, people produced more this year compared to the last just because of the extra day. So normalized growth will be lower than that. At the same time, with all the heatwave going on, I think we also need to discount electricity production spike. It is very likely the electricity generated mostly went into cooling purposes instead of for manufacturing. My electricity bill spiked by about 100% in March. Some of my friends had it worse.

February 2016

I am unsure how much the electricity generation surge is due to mining growth recovery (is it a recovery?) however. I can run a regression model I suppose, but meh. Looking at the lines alone can tell you much about the correlation.

The new core inflation published by the Department of Statistics appears stable, suggesting consumption growth might be stable too. But who knows. With the way economy is going, there might be enough slack that increased economic activities would not affect inflation much. Import expansion for the quarter was uninspiring as well, pointing to the possibility that the economy did not go far enough toward fulfilling its potential. Stable (and low?) inflation and weak import growth mean weak consumption growth.

Export growth is also not convincing by the way.

Government spending growth might be hurting. For most of the first quarter, Brent prices were below $40 per barrel and the government really wanted to cut its deficit still. Things might be better in 2Q16, but not before as far as public expenditure is concerned.

In the end, I think growth might be about the same as the last one. Might be slightly slower too for all I know. In 4Q15, the Malaysian RGDP grew 4.5% YoY.

Maybe you know better?

The Department of Statistics will release Malaysia’s GDP figures on Friday, May 13.

How fast do you think did the Malaysian economy grow in 1Q16 from a year ago?

  • 3.0% or slower (8%, 1 Votes)
  • 3.1%-3.5% (8%, 1 Votes)
  • 3.6%-4.0% (23%, 3 Votes)
  • 4.1%-4.5% (54%, 7 Votes)
  • 4.6%-5.0% (8%, 1 Votes)
  • 5.1%-5.5% (0%, 0 Votes)
  • Faster than 5.5% (0%, 0 Votes)

Total Voters: 13

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Categories
Economics

[2658] Quick reaction to Malaysia’s December economic figures

Export and import numbers for December 2012 do not look good. Export contracted by 5.8% while imports decreased by 6.5% from a year ago. Despite the bad numbers, industrial production index grew by 3.7% from a year ago.

I find this curious. Import contracted and that means the domestic economy might have slowed down. Exports contracted too and that means external demand did not do too well either. So, industrial index should take a hit but it grew anyway, albeit slower than the 7.1% growth in November versus a year ago. It is possible that there is a lag between the index and trade figures but strong index number last month did not reflect in this month’s trade figures.

Maybe the inventory went up. The fourth quarter GDP figures will be released later this month. We will see what happened to the inventory soon.

Categories
Economics

[2128] Of is manufacturing out of the woods?

The Department of Statistics releases the Industrial Production Index today:

Sectors

Index October 2009

% Changes
Year-on-Year

% Changes
Month-on-Month
IPI

106.5

0.7

5.7
Mining index

96.4

-2.7

2.3
Manufacturing index

109.9

1.0

7.0
Electricity index

123.1

13.4

7.7

The important column is the year-on-year one.

The Industrial Production Index (IPI) in October 2009 posted a marginal growth of 0.7% year-on-year for the first time since September 2008. Meanwhile, the IPI in September 2009 was revised negative 6.0% year-on-year. The increase in October 2009 was due to the increases in the two indices: Manufacturing (1.0%) and Electricity (13.4%). However, the index of Mining posted a decrease of 2.7%.

Month-on-month, the IPI increased 5.7%. The cumulative index for the period of January-October 2009 declined 9.7% as against the same period in 2008. [Index of Industrial Production Malaysia October 2009. Department of Statistics of Malaysia. December 10 2009]

The manufacturing sector may finally be out of the woods. This is dependent on any revision to the figure that may occur next month however.

Notwithstanding the revision, given the centrality of the manufacturing sector to Malaysian economy, this improvement is hugely important. It provides a strong pragmatic, instead of ideological, case against the need for a third stimulus package.

The electricity is particularly indicative of possible future trend. Electricity can be argued as a leading indicator because one, it is a crucial input across a great many sectors, two, there is likely a lag between electricity consumption and completion of a goods and three, because it is an lagging input with respect to goods completion, any increase in production will be preceded by increase in electricity consumption, holding all else constant. That is why I was excited as early as July this year, as far as the IPI is concerned, when year-on-year electricity consumption first grew after it fell for an extended period.

What I would like answering is this: is the cause of the improvement in the IPI due mostly to foreign demand for domestic goods or domestic demand for domestic goods?

If it is the former, then it is likely that economic recovery, at least as far as manufacturing is concerned, has been driven largely by external demand, not Malaysian stimulus spending that is aimed at increasing domestic demand. In other words, it answer the effectiveness of the two stimulus spending. Given the huge size of external demand for domestic goods compared to domestic demand for domestic good, you know where my money is.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved

p/s — Elanor commented and brought up a factor that I regretfully missed. Accounting for that factor, it is becomes tenuous to claim that the increase in October is due to non-seasonal factor and therefore, due to underlying trend. This is so because year-on-year fails to remove seasonal effect as it typically does.

Nevertheless, being a stubborn person that I am, there is a good reason to think that the economy is improving, especially since the IPI has been improving (okay, performing less bad rather than improving) since January this year.

Categories
Economics

[2078] Of a good sign?

I should really be at University Library right now but I just could not resist blogging about this.

The latest Industrial Production Index produced by the Department of Statistics has it that electricity output increased and more importantly, it increased based on year-on-year basis in July 2009. This means, electricity output has been increasing on year-on-year basis for two consecutive months. It first registered positive year-on-year growth in June 2009 after months of output reduction. This is another blow to government spending-based stimulus advocates because it indicates that the economy is recovering well before the effect of stimulus spending comes into play.

Electricity output, or rather consumption (but really, the two should be almost the same) has been argued as a good indicator of economic performance. See this. The following table is taken from the Department of Statistics.

Sectors

Index July 2009

% Changes Year-on-Year

% Changes Month-on-Month
IPI

104.8

-8.4

7.1
Mining index

99.6

-1.9

10.0
Manufacturing index

106.2

-12.0

6.2
Electricity index

118.7

3.1

3.5

I will blog about this later. For now, I need to make a dash to the University, which is, like, 100 meters away. Oh, so far away!

Heh. I love my life.

Categories
Economics

[1167] Of a fall of 0.2% or 7.2%?

An article by Bernama highlights that the Malaysian industrial production index falls 0.2%:

KUALA LUMPUR, April 9 (Bernama) — The Industrial Production Index (IPI) for February 2007 fell 0.2 per cent to 123.0 compared with 123.2 in February last year. [February Industrial Production Index Down 0.2 Pct. Bernama. April 9 2007]

While true, the magnitude of drop from the previous month is actually 7.2%:

Compared with the index of 132.5 in January 2007, the IPI for February 2007 dropped 7.2 per cent. [February Industrial Production Index Down 0.2 Pct. Bernama. April 9 2007]

Is this bad news?

Without more information, I cannot really say. From the look of it, through limited data, it seems like seasonal fluctuation and nothing more though. I however am tempted to link the decrease to the fall in demand for electronics in the US.

Regardless, this is how the index looks like at the Department of Statistics of Malaysia:

By the Department of Statistics of Malaysia. Public domain?

What do you think?

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved

p/s — okay. I forgot about seasonal adjustment. Now, I am embarrassed.