ANALYSTS SEE GDP GROWTH EXCEEDING 5PC

However, they say slowdown in major economies may affect Malaysia

AS the economy grew faster than the consensus’ first-quarter projection, analysts now expect Malaysia’s gross domestic product (GDP) to expand more than 5.0 per cent this year.

Even as the strength in the firstquarter data was comforting, they cautioned that potential headwinds posed by a slowdown in major economies were likely to present tougher times for Malaysia.

Malaysia reported first-quarter GDP growth of five per cent yearon-year.

OCBC Bank economist Wellian Wiranto said this came ahead of the four and three per cent that the market and the bank had expected, respectively.

While exports helped, the key factor in the outperformance was the recovery in the domestic consumption, bolstered by labour market normalisation, he added.

Wellian expected Malaysia’s full-year GDP growth at 5.7

per cent, an increase from OCBC’s earlier projection of 5.4 per cent.

In the first quarter, Malaysia’s current account balance dipped to 0.7 per cent of GDP compared with 3.6 per cent in the fourth quarter of last year.

“This marked the thinnest current account buffer since the second quarter of 2016 and came at a time when investors would pay greater attention to the metric. While the current account should stay in the surplus territory, the fact that the cushion had gotten thinner could translate to more susceptibility to more volatile capital flows,” said Wellian.

UOB Group said the economy was on track for a 5.5 per cent fullyear growth, barring any unexpected turn in the global outlook.

This would be higher than the long-term 20-year average of 4.5 per cent and the official estimated potential growth of three to four per cent.

UOB senior economist Julia Goh and economist Loke Siew Ting said the five per cent GDP growth in the first quarter was higher than its estimate of 4.5 per cent and Bloomberg market consensus of 4.0 per cent.

“Despite expectations of slower global growth for this year, there are sufficient domestic growth drivers aided by reopening of the economy and transition to endemicity.”

Goh and Loke expected Bank Negara Malaysia to next raise

25 basis points (bps) in the Overnight Policy Rate during the third quarter, after surprisingly increasing the rate by 25bps to 2.0 per cent last week.