KUALA LUMPUR, Nov 6  -- The manufacturing sector is forecast to rebound by 7.0 per cent next year, driven by steady improvement in both the export-and-domestic-oriented industries.

The Finance Ministry (MoF) said the electrical and electronics (E&E) segment is projected to accelerate in line with the digital transformation as work from home (WFH) and virtual communication become part of new business practices.

The higher demand for integrated circuits, memory and microchips within the global semiconductor market will further support the segment, it said in its Economic Outlook 2021 report released today.

It added the production of chemical and rubber products is expected to expand rapidly in tandem with the increase in demand for disinfectants, sanitisers and rubber gloves.

"With the economic recovery, consumer-related products will benefits from higher household disposable income, while construction-related products will be supported by major infrastructure and affordable housing projects," the ministry said.

During the first half of 2020, MoF said, the manufacturing sector contracted by 8.7 per cent as almost all industry operations were temporarily halted following supply chain disruptions amid the Movement Control Order.

It said within the export-oriented industries, the E&E cluster was severely affected as global demand decelerated sharply.

Domestic-oriented industries also recorded sluggish growth with transport equipment, non-metallic mineral products, and basic metal and fabricated metal products segments registering double-digit contraction, it added.

Nonetheless, MoF said the manufacturing sector is expected to improve by 2.4 per cent in the second half of 2020 as industrial activities resume operation in line with the gradual lifting of the MCO.

Overall, for the year, the manufacturing sector is expected to decline by 3.0 per cent, said the ministry.

-- BERNAMA