Analysts upbeat on Malaysia’s economic performance
KUCHING: Malaysia’s gross domestic product (GDP) growth of 5.6 per cent year on year (y-o-y) in the first quarter of 2017 (1Q17) has come in slightly above analysts’ expectation of 5.4 per cent y-o-y.
According to the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research), Malaysia GDP reached 5.6 per cent y-o-y in the first quarter, the highest in two years.
Based on the current indicators, it highlighted that it is optimistic that Malaysia’s economy to expand by 4.9 per cent this year given the upbeat performance of domestic and global economy.
“The strong growth is expected due to better performance in global as well as domestic economic activities for the first three months in 2017. This is line with the upward trend in industrial production which grew by 4.3 per cent y-o-y during the first quarter,” MIDF Research said.
The research arm maintained its forecast for GDP growth this year at 4.9 per cent.
MIDF Research noted that economic growth for the first quarter was mainly contributed by private consumption and investment with both grew solidly by 6.6 per cent y-o-y and 12.9 per cent y-o-y respectively.
The research arm further noted that apart from that, total investment rose sharply by 10 per cent y-o-y, triple than previous year’s growth of 3.1 per cent.
“Improvement in Malaysia’s consumption and investment is possibly explained by the optimism in consumer and business confidence during the first quarter,” the research arm said.
“According to Malaysian Institute of Economic Research, business confidence rose significantly from 81.2 point in 4Q16 to 112.7 point in 1Q17 while consumer confidence grew firmly to 76.6 point.”
The strong growth is expected due to better performance in global as well as domestic economic activities for the first three months in 2017. MIDF Research
It added that the commendable performance by private sector in the three months of the year validates the rise in both leading indicators.
Meanwhile, MIDF Research highlighted that the agriculture, forestry and fishing sector recorded the highest growth among major economic sectors.
The research arm pointed out that the sector grew by 8.3 per cent y- o-y after four consecutive quarters of contraction.
“Due to elevated commodities prices in global market, rubber and oil palm recorded a double digits growth of 23.5 per cent yo-y and 17.7 per cent y- o-y respectively.
“For manufacturing, the sector expanded by 5.6 per cent y- o-y,” MIDF Research said.
It added that gradual recovery in global demand and exports market are among the factors contributing towards the better growth in manufacturing sector.
Gauging by current momentum in external demand, the research arm reckoned manufacturing sector would continue to perform better for the rest of the year.
Moving forward, the research arm opined that steady improvement in major economies coupled with modest growth in commodities prices will provide a positive impact on Malaysia’s economy via exports demand and increase in industrial production especially in the export- oriented industries.
“Besides, improving labour market, continued wage growth and moderating inflation will support and spur domestic economy,” it said.