MALAYSIA'S IPI TO SEE MODERATE RECOVERY, SAY ECONOMISTS

KUALA LUMPUR, Sept 10 (Bernama) -- Malaysia's Industrial Production Index
(IPI) is likely to see a moderate recovery going forward on the back of
improving economy conditions, according to economists.

The IPI improvement will be supported by a pick-up in export orders, rise in
economic activities due to stimulus packages and attractive monetary conditions,
said Malaysia's Bank Islam's senior economist Azrul Azwar Ahmad Tajudin.

"I think we should see more and more signs of economic recovery as we go
along in the second half of this year, and the gross domestic product (GDP)
should return to positive in the fourth quarter," he told Bernama Thursday.

The IPI fell by 8.4 per cent to 104.9 in July 2009 from 114.5 in July last
year but was 7.1 per cent higher when compared to 97.9 recorded in June 2009.

"This was the slowest pace of contraction since November 2008 and it was
above economists' expectation," Azrul Azwar said.

Economists had earlier projected the July 2009 IPI to decline by 10.5 per
cent based on a similar trend recorded in 2008.

For July 2009, the manufacturing and mining indices recorded decreases of 12
per cent and 1.9 per cent year-on-year respectively while the electricity index
increased 3.1 per cent.

"All these indications prove that the outlook for economy recovery is better
now," Azrul Azwar said.

Sharing the same view, Rating Agency Malaysia's chief economist Dr Yeah Kim
Leng said the country's manufacturing sector should see a slower rate of decline
in export volume.

"The recovery will be supported by improving export orders and rise in
consumer spending, as well as signs of recovery in developed countries badly hit
by the recession," Yeah said.

According to him, the expected recovery of the US economy in the third
quarter or fourth quarter this year will further improve global conditions.

On manufacturing trends, Yeah said the improvement will be seen on a
month-on-month basis though declines are expected to prevail on a year-to-year
basis.

The improvement will also in tandem with positive signs seen in key regional
countries like China, India and Indonesia, he said.

Yeah said the economic turnaround will be indicated by positive
manufacturing sector data, adding that growth in the sector is likely to be led
by export-oriented industries such as those in electrical and electronic product
sales.
-- BERNAMA