Thursday, February 12, 2015

Dec 2014 Industrial Production: Smokin’

Back in 2011, I remember the budget coming out and the complete disbelief at the government’s 2012 growth forecast. From economists to the man on the street, nobody thought growth would be anywhere near 5%, much less exceed it (this was right after the Greek bailout). Hell, I was wrong too – I thought 5% was achievable, but a little on the optimistic side. In the end, the economy hit 5.6% GDP growth for 2012, almost right in the middle of the government’s initial forecast.

Deja Vu.

Yesterday’s industrial production report shows  very healthy economy, even with the drop in oil prices and the pressure on the Ringgit (log annual and monthly changes; seasonally adjusted):



Mining output was well up, due in no small part to the coming onstream of the Gumusut-Kakap oil field in October. Manufacturing is well up, both on annual as well as monthly growth metrics.

Whatever the outlook for 2015, 2014 was a bumper year (log annual changes):


First we got the positive trade report last week (nary a current account deficit in sight), and now this. Along with the IPI, DOS released the quarterly surveys for the construction and distributive trade sectors – both were cruising along at 7.3% and 9.7% annual growth respectively. 2014 will be ending on a decent note.

The IPI based forecast above suggests 4Q2014 GDP growth will be around 5.8% (±2%), which is a little stronger than 3Q’s 5.6%. I’m not sure I believe that, but we’re about to find out in a matter of hours – the 4Q GDP report is due today.

Technical Notes:

December 2014 Industrial Production Index report from the Department of Statistics (warning: pdf link)

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