Malaysia Q3 GDP Growth Weakest in 2 Years
The Malaysian economy expanded 4.4 percent year-on-year in the third quarter of 2018, following a 4.5 percent expansion in the previous three-month period and below market consensus of 4.6 percent. It was the weakest growth rate since the third quarter of 2016, as net external demand contributed negatively to GDP growth, while investment, private consumption, and government spending continued to rise at a solid pace.
11/16/2018 12:18:33 PM
In the third quarter, exports went down by 0.8 percent, reversing a 2.0 percent rise in the June quarter. Imports edged up 0.1 percent, slowing from a 2.1 percent rise in the previous three months.
Private expenditure increased by 9.0 percent, following a 8.0 percent advance in the previous period, driven by higher consumption of food & beverages, communication, and transport and restaurants & hotels. Also, gross fixed capital formation grew 3.2 percent, faster than a 2.2 percent expansion in the preceding quarter, mainly due to a rise in machinery & equipment investment; and government spending went up 5.2 percent, faster than a 3.1 percent increase in the prior three months.
On the production side, growth slowed for construction (4.6 percent vs 4.7 percent in Q2). Additionally, the mining & quarrying sector contracted more than in a quarter earlier (-4.6 percent vs -2.2 percent) and the agriculture sector continued to shrink (-1.4 percent vs -2.5 percent). On the positive note, services output expanded by 7.2 percent, compared to a 6.5 percent growth in the second quarter and manufacturing output also grew faster (5.0 percent vs 4.9 percent).
On a quarter-on-quarter seasonally-adjusted basis, the GDP advanced by 1.6 percent in the third quarter, the strongest grew since the third quarter of 2017.
Moving forward, economic growth is estimated to remain on a steady growth path in 2018, driven mainly by domestic demand amid the reprioritization of public sector expenditure. Meanwhile, a gradual recovery in commodity production will also provide support to GDP growth going into 2019.
Headline inflation is expected to rise mainly due to higher oil prices and following the impact of consumption tax policy in 2019.