Slower Q3 growth likely on sluggish local and foreign demand
KUALA LUMPUR: Malaysia’s economic growth likely slowed in the third quarter as sluggish demand at home and abroad began to drag on activity after a solid first half, a Reuters poll showed.
The median forecast from the poll of 14 economists was for growth of 4.4 per cent in JulySeptember compared with a year earlier, slowing from 4.9 per cent in the second quarter and 4.5 per cent expansion in JanuaryMarch.
Individual forecasts ranged from 4.1 to 4.7 per cent.
Malaysia was the only Southeast Asian nation to report an acceleration in growth in the AprilJune period from the previous quarter, as the region grappled with softening global demand and the escalating United StatesChina trade war.
But weaker exports and domestic consumption started to drag on Southeast Asia’s third-largest economy in the last few months, according to economic research consultancy Capital Economics.
“The Malaysian economy has outperformed the rest of the region for most of this year but recent data suggest that it is coming to an end,” said the firm.
“The latest activity data have been poor... Our gross domestic product Tracker, which is based on this monthly data, points to a fairly sharp slowdown in the third quarter,” said Capital Economics, which sees growth at 4.2 per cent in the quarter.
Malaysia’s exports fell 6.8 per cent in September, the biggest decline in nearly three years and widening from a 0.8 per cent contraction the previous month.
Factory output grew 1.7 per cent in September, performing below expectations for a fourth straight month.
Domestic consumption has also cooled. Wholesale and retail activities grew 5.7 per cent annually in the third quarter, down from 6.1 per cent pace over AprilJune, according to data from the Malaysian Department of Statistics.
“High frequency indicators like business sentiment, consumer sentiment and motor vehicle sales slowed during the quarter indicating subdued domestic demand,” said HSBC.
Bank Negara Malaysia made a preemptive cut to its key interest rate in May in a bid to boost growth, but has since stood pat as it expects private spending to remain resilient and sufficient to offset pressure from weaker exports.