GDP seen picking up in Q2, bucking regional trend

14 Aug 2019 / 17:53 H.

KUALA LUMPUR: Malaysia’s economic growth pace rose in the second quarter, helped by slightly stronger exports and manufacturing, a Reuters poll showed.

The median forecast from the poll of 13 economists was for annual growth of 4.8% in April-June, faster than the first quarter’s 4.5% pace.

Individual forecasts ranged from 4.3% to 5%.

If the pace tops 4.5%, Malaysia will be the first Southeast Asian country to report an acceleration in growth in the second quarter.

“Malaysia is a notable exception to the export-led GDP slowdown that most of the Asian and global economies have been suffering currently amid intensified global trade war and a technology downturn,“ said ING economist Prakash Sakpal.

ING’s forecast for the quarter is 4.8% growth.

In April and again in May, Malaysia’s industrial production rose 4% from a year earlier, the strongest since October, supported by gains in electricity generation and mining.

While Malaysia as a large exporter of intermediary goods to China remains vulnerable due to the Sino-US trade war, its exports for the second quarter were marginally higher than a year earlier, supported by demand for palm oil, oil and gas and manufactured goods.

Malaysia is Southeast Asia’s third-largest economy, and its major exports include palm oil and liquefied natural gas.

Julia Goh, Malaysia-based economist with UOB Bank, said in a note on Tuesday she expects private consumption remained “resilient” in the quarter, aided by demand for Islamic holidays, private sector bonus payouts and financial assistance to civil servants.

UOB predicts 5% second quarter data. But Goh said she doubts a growth rebound is sustainable given “intensifying global downside risks tied to trade tensions between major countries, slower Chinese economy, the possibility of a no-deal Brexit and a potential credit default in Argentina.”

To try to spur growth, Malaysia’s central bank in May made its first rate cut since 2016, to by 25 basis points to 3%. – Reuters

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