Malaysia’s real GDP to grow 4.4 pct y-o-y in Q3 — RHB Research

KUALA LUMPUR: RHB Research expects Malaysia’s real gross domestic product (GDP) growth to move at a slower pace of 4.4 per cent in the third quarter (Q3) of 2015, from 4.9 per cent recorded in the second quarter (Q2) of 2015.

In a research note today, the research house said industrial production growth picked up to 5.1 per cent in September from 2.3 per cent in August but was weaker compared with 6.1 per cent in July.

“This was mainly reflected in the acceleration in the manufacturing and electricity output while mining production rebounded during the month.

“The former was aided by the sharp drop in the ringgit, making Malaysia’s export products more attractive to foreign buyers,” it said.

In line with a pick-up in manufacturing production, RHB Research said manufacturing sales growth accelerated to 5.4 per cent in September from 0.8 per cent in August and compared with -1.3 per cent in July.

“As a whole, industrial activities improved slightly in Q3 compared to Q2, supported by resilient electrical and electronics and other exports given the weak ringgit.

“Nonetheless, consumers and businesses will likely remain cautious, as indicated by a further slowdown in domesticoriented manufacturing and services activities, given that they require more time to adjust their spending patterns,” it added.

Notwithstanding the challenges faced by the global economy, the research house said it is envisaged to sustain its growth during the year and into 2016.

“This will likely sustain the growth for the country’s export and manufacturing sales in the periods ahead,” it said.

It said the impact from lower oil prices on oil and gas investment and the earlier policy tightening over the last two years to control rising household debts will likely continue to constrain domestic demand growth in 2016.

“We expect Malaysia’s real GDP to sustain at 4.9 per cent in 2016, a tad higher than an estimate of 4.8 per cent in 2015,” RHB Research said.