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Economists expect 1.26pc fall in Malaysia's industrial output [11-10-2012]  
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Industrial production growth levels are likely to have slipped into the negative, weighed down by the weak exports, said eco-nomists.

A Business Times poll expects the industrial production index (IPI) to contract by 1.26 per cent from the 3.7 per cent yearly growth in August.

The numbers will be released by the Statistics Department today.

Jeff Ng of Standard Chartered Bank said the August number is likely to be supported by the domestic economy as exports growth continues to be in the red.

"Electricity production is expected to cushion manufacturing volatility but mining is likely to be still negative."

Exports shrank by 4.5 per cent in August as demand for broad-based Malaysian products weakened in major Asian markets like India and China.

Oversea-Chinese Banking Corporation Bank economist Gundy Cahyadi said the export growth number indicates further drag to the economy in the third quarter.

He warned the worse is yet to come as the recent slide in palm oil prices had not been reflected in the August data yet.

Overall industrial production remains weighed down by the poor export growth in recent months.

"Note that for the bulk of this year, the main drag to IPI has stemmed from the export-oriented industries, and as such, the poor August export figure would inherently suggest that IPI growth could enter the negative territory once again for the first time since mid-2011."

If the sharp moderation in imports were to continue, it could also be a troubling sign.

He expects to see some concern when Bank Negara Malaysia hosts its monetary policy meeting early next month.

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