Ambank: Growth for 2018 to moderate to 5.5%
PETALING JAYA: Malaysia’s economic growth for the third quarter (3Q17) may have peaked at 6.2% based on preliminary data, with gross domestic product (GDP) in 4Q17 estimated at 6%.
AmBank Research said going into 2018, GDP growth will moderate to an estimated 5.5% year-on-year (y-o-y) largely due to the high base effect of this year.
It noted that based on preliminary estimates from the October macroeconomic data, third-quarter GDP for this year has most likely peaked.
“Our preliminary estimates indicate a 6% GDP growth in 4Q17, bringing the full-year average GDP to 5.9%,” said the research house in a note.
It added that slower gains from the manufacturing and mining sectors led the industrial production index (IPI) in October to grow at a slower pace.
Despite stronger electricity production in October, the IPI only increased by 3.4% y-o-y, as the growth moderated to a 13-month low.
In comparison, the IPI, which measures factory output, rose by 4.7% y-o-y in September.
Industry-wise, the manufacturing sector registered a growth of 4.2% y-o-y in October from 7.1% y-o-y in September, while mining ticked up 0.8% compared to 2.1% y-o-y in September.
On the other hand, the output from electricity production rose by approximately 4.7% y-o-y from 2.2% y-oy in September.
“Although manufacturing production grew at a weaker pace, manufacturing sales continued to expand at double digits by 11% y-o-y in October, reporting its 11th consecutive month of double-digit growth, benefiting from the cheap ringgit against the US dollar.
“Exports expanded strongly by 18.9% y-o-y in October, while imports surged by 20.9% y-o-y with positive momentum from the import of intermediate and capital goods.“
Meanwhile, Affin Hwang Capital Research said the slower IPI growth in October was “sharply lower than market expectations of 4.1%”.
The research house noted that the slowdown in total IPI growth was partly due to a higher base from the corresponding period of last year.
“On a month-on-month basis, IPI growth turned around strongly from -0.1% in September to 2.7% in October, as reflected in all three sub-components, indicating that the country’s economic growth momentum would likely continue into 4Q17.
“The slowdown in the production of export-oriented industries was reflected in the output of petroleum, chemicals, rubber and plastic products, which has the highest weightage of about 25.4% in total IPI, from 4.9% y-o-y in September to 2.1% in October.
However, this was cushioned by the higher output of domestic-oriented industries in the same month,” it said.
Affin Hwang Capital Research expects the country’s real GDP to grow by 5.7% y-o-y and 4.9% y-o-y in 2017 and 2018, respectively.