Weak export growth drags Malaysia’s 3Q14 GDP
Analysts observe GDP growth likely to moderate in 2015
KUALALUMPUR: The country’s gross domestic product (GDP) growth eased to 5.6 per cent in the third quarter of 2014 (3Q14) compared with 6.5 per cent in 2Q14 due to slower export growth.
Analysts believed the uncertain external environment as shown by the lower export numbers in 3Q14 will pose downside risk to domestic growth, particularly through trade activities and the financial markets in the near future.
They also expect the 4Q14 GDP growth to soften further due to weaker consumer spending.
The research arm of JF Apex Securities Bhd (JF Apex Research) in a report said the slowdown in trade activities since July have resulted in slower export growth of 2.8 per cent against 8.8 per cent in 2Q14.
It added that import recorded a slower expansion of 2.2 per cent compared with 3.9 per cent in 2Q14 supported by the performance in imports of goods and services.
Similarly, the research division of MIDF Amanah Investment Bank Bhd (MIDF Research) in a report said the weak export growth poses a concern and together with the weak imports growth, the situation might indicate that exports could be experiencing a downtrend.
At the same time, AllianceDBS Research Sdn Bhd (AllianceDBS Research) in a report said the industrial production manufacturing index also experienced a slower expansion of 5.1 per cent in 3Q14 compared with 7.4 per cent in 2Q14.
It noted the manufacturing sector registered a softer growth of 5.3 per cent in 3Q14 against 7.3
Moving ahead, we expect the economy to soften further in 4Q14 on the account of weaker consumer spending.
Manokaran Mottain, AllianceDBS Research economist
per cent in 2Q14.
AllianceDBS Research economist Manokaran Mottain said, “Moving ahead, we expect the economy to soften further in 4Q14 on the account of weaker consumer spending.“This was reflected in the recent Malaysian Institute of Economic Research (MIER) sentiment indices, which fell below the 100-point threshold in 3Q14.
“The business conditions index dropped to 95.9 (points), as compared with 113 points in 2Q14 while consumer sentiment index was down to 98 points as opposed to 100.1 points in 2Q14.
“In this regard, we reckon that domestic demand, especially private consumption will dampen towards the rest of the year,” he said.
Nevertheless, he observed that overall, Malaysia’s growth performance is still healthy.
He pointed out that with a projection of five to 5.5 per cent GDP growth in 4Q14, AllianceDBS Research believed 2014 full year to register a GDP growth of 5.8 per cent before moderating to 5.2 per cent in 2015.
Going into 2015, the research firm highlighted key areas to observe include the on-going fiscal consolidation reforms, which include the implementation of the Goods and Services Tax (GST) and the review of the fuel subsidy mechanism that will provide further indication to next year’s GDP growth direction.