GROWTH BEATS EXPECTATIONS
Expansion driven by resilient private sector activities and higher exports, says Bank Negara
MALAYSIA’S economic growth of 4.7 per cent in the fourth quarter of last year exceeded market expectations. But there was mixed response from analysts, especially on the outlook for this year.
Bank Negara Malaysia said yesterday the 4.7 per cent gross domestic product (GDP) growth, which also brought the full-year growth to 4.7 per cent, was fuelled by resilient private sector activities and higher exports.
Governor Datuk Nor Shamsiah Mohd Yunus said private sector activity remained the main driver of growth, while a rebound in the export of goods and services contributed to the positive growth of net exports.
“We see a trend moderation to the economy after an exceptionally strong performance in 2017 and one-off impacts such as supply-side shocks and postelection policy uncertainty,” she said at the GDP briefing, here, yesterday.
“Among the factors influencing economic growth last year were resilient private sector spending, lift from net exports and continued expansion in the services and manufacturing sectors.
“However, there were disruptions in commodity-related sectors in the second and third quarters, as well as government spending rationalisation that impacted the economy.”
MIDF Research head Mohd Redza Abdul Rahman said the fourth-quarter growth was slightly below its forecast of five per cent but above the market consensus of 4.5 per cent.
“Overall, last year’s GDP growth met our expectation of 4.8 per cent year-on-year expansion,” he told NST Business.
He said easing trade war tensions, appreciation of the ringgit and higher commodity prices would drive growth this year.
“We expect GDP to grow 4.9 per cent this year,” he said.
Meanwhile, JP Morgan said despite the solid headline outturn, the details were slightly less upbeat. Domestic demand slowed across the board, with government consumption and fixedasset investment contracting 11.9 per cent quarter-on-quarter, it said.
“With investment slowing, net exports thus provided the bulk of the lift, contributing 0.8 point to headline GDP growth.”
JP Morgan’s GDP forecast for this year remains unchanged at 4.4 per cent.
“The main wild card is private consumption, where we look for stability, led in part by the 2.2 per cent of GDP tax rebates announced in November last year.
“However, should the tax rebates be saved, this could introduce some downside risk to the forecast. Thus, the incoming private consumption data will be a focal point.”
Nor Shamsiah said Malaysia’s GDP was valued at RM1.23 trillion at constant prices and RM1.43 trillion at current prices.
She expects the country’s current account to remain in surplus as there would be continued goods surplus from global demand and support from commodity exports.
“The Overnight Policy Rate will be maintained at 3.25 per cent as our stance of monetary policy remains accommodative and supportive of economic activity,” she added.