OCBC expects GDP growth at 4.4 pct this year
KUALA LUMPUR: Malaysia's Gross Domestic Product (GDP) for the first quarter of 2019 (1Q19) slowed to 4.5 per cent, which was just slightly above OCBC's forecast at 4.4% yoy and Bloomberg's median consensus forecast at 4.3 per cent year on year (y-o-y).
“As economic concerns and government consolidation will likely continue for the rest of this year, we are still expecting at this point for investment to come out weaker for 2019,” said OCBC economist Alan Lau in a statement.
“That said, the government did recently announce that the East Coast Rail Link and Bandar Malaysia projects would be carrying on and this may provide a boost to the economy but there is still no certain details on when it would actually restart.”
Mining and quarrying was the only sector to see a decline, at minus 2.1 per cent y-o-y amid production disruptions to the sector.
There are also additional concerns going forward that the sector may still face a number challenges as recent news reports have highlighted that there will be maintenance works on fields offshore Sabah in addition to a temporary shutdown of the Sabah – Sarawak LNG pipelines.
Meanwhile, the construction sector experienced a slowdown in growth at 0.3 per cent y-o-y. The other sectors were broadly stable with the exception of agriculture, which saw a pick-up 5.6 per cent y-o-y, though this sector alone would not be able to sufficiently boost the country's growth.
“Trade volumes were weaker as exports grew at 0.1 per cent y-o-y whilst imports declined by 1.4 per cent y-o-y. This is unsurprising given the subdued global trade situation and the already mentioned production weaknesses in the mining sector,” Lau said.
“There are also rising risks to the external environment given the escalating trade tensions although Malaysia to some extent may still be able to benefit from substitution effects. Net exports though was a positive contributor to growth.”
That said, the current account surplus widened to RM16.4 billion for the quarter. This was a result of the lower imports in the intermediate and capital goods category.