Poll: M’sia Q4 GDP growth could hit 3½-year low

KUALA LUMPUR: Malaysia’s economic growth in the fourth quarter is expected to have slowed to its weakest since mid2016 on weaker private consumption and external demand, a Reuters poll showed.

The median forecast from the poll of 13 economists was for growth of 4.2% in OctoberDecember compared with a year earlier, the slowest pace since the second quarter of 2016. That will be down from 4.4% in the third quarter and 4.9% in April-June.

Individual forecasts ranged from 3.4% to 4.6%.

Economic growth in Southeast Asia’s third-largest economy over the fourth quarter was likely weighed down by weakness in industrial production and exports, and slowing retail sales, according to Gareth Leather, senior asia economist with economic research consultancy Capital Economics.

“Overall, we are pencilling in growth of 4.0% y/y, down from 4.4% in Q3,“Leather said in a research note on Friday.

Factory output in December grew 1.3% from a year earlier, below expectations and slower than the 2.0% expansion from the previous month. Industrial production rose 0.3% in October, its slowest pace in over six years.

However, exports from trade-reliant Malaysia rose 2.7% in December, beating estimates and snapping a four-month streak of negative growth.

Growth in the fourth quarter may have had a boost in

December from frontloading of manufacturing activity and potentially exports ahead of the Lunar New Year, Standard Chartered said in a research note on Friday.

But a pre-emptive cut by Bank Negara Malaysia to its benchmark interest rate in January indicates that the economy will likely face some difficulty in meeting growth targets, Standard Chartered said.

Prime Minister Tun Dr Mahathir Mohamad said yesterday the government expects growth to come in at 4.8% in 2020, “despite challenging times”.

He said the government expects the economy to improve on the 4.7% growth projected for 2019. He did not elaborate.

“With good fiscal discipline, our budget deficit will narrow to 3.2% this year. We are committed to provide a stable business environment for investors. We will be business friendly,” Mahathir said in a speech at a business conference.

Standard Chartered said: “After surprising markets with a pre-emptive 25 bp cut at its January meeting, the Monetary Policy Committee’s policy state-ment noted that delays in project implementation could pose a downside risk to growth.

“Furthermore, we have not observed a pick-up in capital goods imports. While the central bank only cut preemptively, it may be open to further cuts if the coronavirus outbreak worsens.” – Reuters