Malaysian manufacturing momentum set to hold on E&E strength

By Faiqah Kamaruddin April 12, 2026

KUALA LUMPUR: Malaysia's manufacturing sector is expected to maintain its growth momentum, supported by the ongoing upcycle in the electrical and electronics (E&E) industry.

Affin Hwang Investment Bank Bhd said production expanded strongly by 14.1 per cent year-on-year (YoY) in the first two months of 2026.

In February, the industrial production index grew at a slower rate of 3.1 per cent YoY, the weakest expansion since November 2025.

This is due to a contraction in the mining sector caused by lower crude oil output and ongoing declines in natural gas production.

At the same time, manufacturing growth eased to 4.2 per cent YoY, while electricity production also moderated to 4.6 per cent YoY.

"The slowdown in manufacturing activity reflected softer output across domestic-oriented segments, including food and beverages, textiles, wood products and nonmetallic minerals.

"Nevertheless, E&E remained the standout performer, sustaining double digit-growth for the fifth consecutive month at 12.9 per cent YoY, supported by key sub-sectors such as computer & electronics," it said.

Affin Hwang, however, said risks are now increasingly tilted to the downside due to external factors.

"Escalating geopolitical tensions, particularly in the Middle East, have caused disruptions to the global energy supply, resulting in higher commodity prices, while renewed trade frictions and tariff uncertainties may weigh further on external demand and supply chains," it said.

Affin Hwang said, on balance, it has maintained its 2026 gross domestic product growth forecast at 4.8 per cent, supported by resilient domestic demand and the ongoing upcycle in the E&E sector.

It added that the impact of the current energy crisis is expected to be cushioned by proactive government measures to ensure stable energy supply and to help ease rising cost-of-living pressures for households.

Source: https://www.nst.com.my/business/economy/2026/04/1415917/malaysian-manufacturing-momentum-set-hold-ee-strength