Moderate economic growth could continue until 3Q16
KUCHING: Malaysia’s leading indicator was firmly negative in the last two quarters of 2015 and as such, analysts believe that the country could continue to see moderate economic growth until the third quarter of 2016 (3Q16).
In a recent report, the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) highlighted that Malaysia’s leading indicator reentered into negative territory in November and slumped further in December by 1.2 per cent.
“The drop in December reading was due to decline in real money supply M1 and lesser housing permits approved.
“The negative figure on December means that the leading indicator averaged on negative in the last two quarters of 2015.
“On this score, we could expect that the moderate economic growth could continue until the third quarter of 2016,” the research team said.
Nevertheless, Malaysia’s gross domestic product (GDP) grew by 4.5 per cent in the fourth quarter last year, leading to an overall growth of five per cent in 2015.
“Our forecast for the GDP was to grow at 4.6 per cent in the last quarter and five per cent for the whole 2015, while the median consensus by Bloomberg is expecting the GDP to grow by 4.1 per cent in 4Q15 and 4.8 per cent for year 2015,” it said, noting that Asian Development Bank, International Monetary Fund and World Bank were all expecting Malaysia to grow by 4.7 per cent in 2015.
“The higher than expected GDP growth for year 2015 was due to the resilience in Malaysia’s domestic
The drop in December reading was due to decline in real money supply M1 and lesser housing permits approved.
economy and better exports performance since the sharp depreciation of ringgit in August.
“On a quarter-on-quarter seasonally adjusted annualised rate (SAAR) basis, GDP grew by 6.2 per cent in 4Q15, significantly higher than 2.6 per cent in 3Q15,” MIDF Research pointed out.
Meanwhile, it said, Malaysia saw its weakest trade and exports growth since 2009 amid China’s economic slowdown.
“Total trade increased in 2015 by 1.2 per cent to RM1.466 trillion from RM1.448 trillion in the previous year, marking the weakest trade performance for Malaysia since 2009.
“Total trade shrank in the first half of 2015 (1H15) by 2.8 per cent year-on-year (y-o-y) before recovering in 2H of the year by 5.1 per cent y-o-y.
“In 2015, exports increased marginally by 1.9 per cent to RM780 billion while imports rose by 0.4 per cent to RM685.7 billion.
“The exports growth exceeded our forecast of one per cent in 2015 but largely in line with the expectation of weak performance for the year. Trade balance remained sizeable at RM94.3 billion,” it explained.
Aside from that, the research team highlighted that headline inflation accelerated to 3.5 per cent in January 2016 from 2.7 per cent in the previous month, while core inflation rate, which is the first time Malaysia officially announced the figure, was at 3.6 per cent, slightly lower than the 3.8 per cent figure in the previous month.
MIDF Research