Malaysia GDP Growth Above Forecasts

The Malaysian economy advanced 5.6 percent year-on-year in the first quarter of 2015, moderating from a revised 5.7 percent expansion in the previous period but better than market expectations. The private sector remained the key driver of growth while exports contracted.
Bank Negara Malaysia | Rida Husna | rida@tradingeconomics.com 5/15/2015 9:37:41 AM
On the expenditure side, private consumption advanced 8.8 percent year-on-year, accelerating from a 7.6 percent growth in the last quarter of 2014. The robust expansion was mainly supported by stable labor market conditions and higher wage growth and the flood relief efforts early in the year. The front-loading of household spending prior to the implementation of the Goods and Services Tax (GST) also contributed to the growth. Public consumption expanded by 4.1 percent, advancing from a 2.5 growth in the preceding quarter, due to higher growth in supplies and services amid moderate growth in emoluments. 
 
Private investment grew by 11.7 percent, up from 11.1 percent in the December quarter. Public investment grew by 0.5 percent, rebounding from a 1.9 percent contraction in the previous period, mainly due to higher capital spending by the Federal Government.
 
Exports declined by 0.6 percent, slowing from 1.9 percent growth in the preceding quarter, due to sluggish in exports of services and moderation in exports of goods. Imports increased by 1.0 percent from a 2.6 percent rise in October to December, following a moderation in both imports of goods and services.
 
On the production side, the services sector recorded a steady growth of 6.4 percent, underpinned by growth in all sub-sectors, particularly consumption-related sub-sectors. The manufacturing sector rose 5.6  percent year-on-year, from a 5.4 percent expansion in the previous quarter, mainly driven by stronger performance in the exports-oriented industries, particularly the electronics and electrical (E&E) cluster. The construction sector was supported mainly by the non-residential and residential sub-sectors. The mining and quarrying sector grew by 9.6 percent, mainly due to higher crude oil production. Meanwhile, the agriculture sector contracted as a result of lower palm oil production, arising from flood-related disruptions.
 
Moving forward, Malaysia's GDP is expected to remain on a steady growth path with domestic demand remaining as the key driver of growth amid falling oil prices. Investment is projected to remain resilient with continued capital spending by both the private and public sectors. While private consumption is expected to moderate as households adjust to the introduction of GST, the steady rise of income and stable labor market would support household spending.
 
On a quarter-on-quarter seasonally-adjusted basis, the economy grew by 1.2 percent, slowing from a revised 1.8 percent expansion in the previous three months.

Malaysia GDP Growth Above Forecasts