Malaysia's April industrial output growth continues to impress

And expansion just keeps on going.

According to DBS, industrial output growth in April has remained healthy. The headline number announced last week came in at 4.2% YoY, much in line with market expectation.

Here's more from DBS:

Moreover, the pace of growth has remained relatively unchanged from a 4.3% expansion in the previous month.

This follows after a stunning 18.9% surge in export sales in the same month. Essentially, external demand is expected to remain supportive of growth in the second quarter.

With domestic growth showing signs of cooling, the pick-up in external demand will help to prop up overall economic performance.

This will provide room for the central bank to focus on tackling the rising financial imbalance problem and higher than usual inflation.

We expect Bank Negara to initiate a modest tightening cycle from the next policy meeting in July. The Overnight Policy Rate is expected to be raised by 50bps by the end of the year.