Sectoral Effect of Oil Price, Natural Gas and LNG Prices on Malaysia Manufacturing Sector’s GDP

This study investigates on the impact of GDP on manufacturing sector towards oil and gas prices. As manufacturing sector comprises and is profiled by high oil intensity industry, the study takes account 3 types of energy price, namely Brent Crude, Natural Gas and LNG, and explores the impact of these energies on the manufacturing sector. The study employed an econometrics analysis using ARDL estimates with time series data spanning from 1987 to 2017. The empirical findings depicted that the Brent Crude and Natural Gas prices have a negative relationship with high energy intensity economic sector and the industry that requires high input production of oil and gas. An increase in the Brent Crude and Natural Gas prices reduces the output for manufacturing of electrical and electronics, and manufacturing of transportation and machinery. It also reported that a strong negative relationship found between petroleum subsector and Natural Gas and LNG prices that shares of GDP is denominated by the export of LNG product.