ANALYSTS EXPECT HIGHER Q4 GROWTH
Expansion likely driven by resilient domestic consumption, improved trade
THE economy is expected to have expanded faster in the fourth quarter of last year compared with the third quarter, said analysts.
Investment banks and research firms, such as United Overseas Bank (M) Bhd (UOB) and MIDF Research, are optimistic the fourth-quarter gross domestic product (GDP) growth would be higher than the 4.4 per cent achieved in the third quarter.
UOB expects fourth quarter GDP growth to edge up to 4.7 per cent on domestic private sector spending and supportive exports.
MIDF Research is more bullish, forecasting the economy to grow five per cent in the October-December period and 4.8 per cent for the full year.
“Malaysia’s economic activities were sustained on upward trajectory amid resilient domestic spending and improved external trade performance. We see continuous expansionary momentum, particularly with solid domestic demand, low inflation, receding trade tensions and gradual pick-up of commodity prices this year,” it said yesterday.
Bank Negara Malaysia will release the GDP data tomorrow.
UOB senior economist Julia Goh said the services and manufacturing sectors continued to be key contributors to growth, while the construction sector was aided by a resumption of government spending and mining by an uptick in crude oil and gas production.
She said agriculture was likely to decline further, albeit by a smaller magnitude, amid higher levels of crude palm oil output.
“Generally, regional growth trends levelled off towards the end of last year.
“However, there is renewed caution on the global economy amid weaker corporate earnings and slower manufacturing activity, the lack of clarity on United States policy and lingering trade tensions between US and China.
“The prolonged uncertainty would dampen consumer and business sentiment and thus pose downside risks to growth.
“This is reflected by the dovish tone of many central banks, mirroring a shift in stance at the US Federal Reserve.
“Several regional central banks have kept policy rates unchanged after several hikes last year. India became the first country to cut rates last week, citing the slower growth environment and tame inflation,” said Goh in a report.
“Although there are growing calls for more policy rate cuts in the region, Bank Negara has kept a neutral tone and cuts in the Overnight Policy Rate (OPR) are only moderately priced in the interest rate swaps. We maintain that the OPR will stay at 3.25 per cent this year.”
Standard Chartered Global Research said Malaysia’s economy likely expanded 4.4 per cent in the fourth quarter as private consumption eased.
“The 2018 GDP growth may come in at 4.6 per cent year-onyear, lower than 5.9 per cent in 2017.
“Private consumption was the main growth driver last year, accounting for 92 per cent of GDP growth in the first nine months compared with 64 per cent in the same period in 2017.”
It forecasts a 4.9 per cent GDP growth this year, with private consumption likely to remain the main growth pillar.