KUALA LUMPUR, Sept. 7 (Xinhua) -- Malaysia's Industrial Production Index (IPI) rose 2.6 percent year-on-year in July, boosted mainly by manufacturing and electricity sectors, the Malaysian Statistics Department said in a statement Friday.

The manufacturing index grew 5.2 percent, electricity index increased by 4.5 percent, while the mining index fell 5.9 percent, dragged by the 15.2 percent drop in the natural gas index, offsetting the 4.5 percent growth of crude oil index.

The major sub-sectors of manufacturing which recorded an increase in July were electrical and electronic equipment products that surged 8 percent; petroleum, chemical, rubber and plastic products that rose 4 percent.

Transport equipment and other manufacturers products jumped 13.5 percent.

Despite fall in mining output, the IPI growth was slightly above economists' expectations.

"Moving forward, we foresee IPI performance to expand at steady pace for the second half of 2018 amid escalating trade tension, easing inflationary pressure and volatility risks in global commodity prices and currencies," MIDF Research said in a note Friday.

The research house projected IPI to grow 3.8 percent this year.

"Lower business cost partly due to moderating inflation, stable retail fuel prices and tax-holiday will provide additional boost for industrial production growth to hit 3.8 percent in 2018," it said.