Surprise on the upside for Malaysia’s GDP
KUCHING: Malaysia could record higher than expected growth first quarter of 2017 (1Q17) gross domestic product (GDP) growth, based on the improving leading indicators.
In its latest report on Malaysia’s GDP, analysts at Maybank Investment Bank Bhd ( Maybank IB Research) pointed out that the supply- side indicators suggest a pick up in 1Q17 real GDP growth to around five per cent year- on-year ( y- o-y), compared with a 4.5 per cent y- o-y growth in 4Q16.
This was amidst faster growth in manufacturing production index and index of services, an improvement in the value of construction works done and a rebound in palm oil output or the agriculture sector in general.
To note, 1Q17 real GDP will released on May 19.
“On the basis of the supply-side indicators, 1Q17 real GDP growth may surpsie on the upside, coming in around five per cent y- o-y (4.5 per cent y- o-y),” it opined.
Industrial production growth in 1Q17, it said, moderated to 4.3
On the basis of the supply-side indicators, 1Q17 real GDP growth may surpsie on the upside, coming in around five per cent y-o-y (4.5 per cent y-o-y).
per cent y- o-y as faster manufacturing growth ( 5.6 per cent) was offset by slower growth in mining (1.2 per cent) and electricity ( 0.7 per cent).
However, it pointed out that index of services picked up 6.2 per cent y- o-y in 1Q17, compared with 5.9 per cent y- o-y in 4Q16.
Maybank IB Research also noted that crude palm oil and palm oilrelated output rebounded sharply by 18 per cent y- o-y compared with a decline of 7.6 per cent y- o-y in 4Q16.
It highlighted that the palm oil sector’s high correlation with the agriculture sector GDP implies that the latter rebounded in 1Q17 after four quarters in the red.
“The value of construction works done was up by 9.7 per cent y- o-y in 1Q17, signaling faster growth trends in the construction sector’s GDP,” it added.
On the domestic side, it pointed out the growth in consumer spending appeared sustained as per retail trade index growth was at 7.8 per cent y- o-y growth in 1Q17 compared with 7.9 per cent y- o-y growth in 4Q16.
It added, “The surge in imports of capital goods (42 per cent), indicate strong pick up in real gross fixed capital formation.
“Flattish total government expenditure growth suggest that real public expenditure stabilised last quarter after the contractions in 3Q to 4Q16.”
However, net external demand was not GDP growth accretive last year, taking cue from the narrower trade surplus of RM18.9 billion in 1Q17 compared with RM23.9 billion in 1Q16 and RM27.5 billion in 4Q16.
This was in spite impressive growth in both gross exports (21.4 per cent) and gross imports ( 27.7 per cent).
Maybank IB Research