Malaysia’s GDP growth recovery to sustain for the year, say economists

KUALA LUMPUR: Malaysia’s Gross Domestic Product (GDP) growth of 5.6 per cent recorded in the first quarter (Q1) of this year, the highest quarterly growth seen in two years, signals an economic recovery that economists say will sustain until the end of the year.

Affin Hwang Investment Bank vice-president and head of Retail Research Datuk Dr Nazri Khan Adam Khan said the economy was recovering due to rising exports, improving commodity prices and positive turnaround in the manufacturing sector,  after having recorded the lowest GDP growth since 2009 last year at 4.2 per cent.

“I must say the worse is over,” he told Bernama.

He added that economic growth was expected to remain high this year despite the higher inflation and would translate into positive sentiment for the stock market.

Sunway University Business School Professor Yeah Kim Leng said Malaysia’s Q1 GDP growth came in much-better-than-expected, surprising many economists and market analysts who had mostly forecast a GDP growth of below five per cent.

“Most had underestimated the spillover effects of strong exports on domestic demand, particularly private investment growth which is back to the double-digit territory.

“Importantly, the pace of private consumption held up well to inch closer to trend growth but not in the overheating zone,” he explained.

Another positive trend, he pointed out was that all sectors registered positive growth with stellar performance in agriculture while the two dominant sectors were cruising faster, with services recording 5.8 per cent and manufacturing 5.6 per cent.

“It is certainly a good start for the year and the stronger growth momentum is expected to continue at least in the next two to three quarters. It is also likely to trigger upward revision of growth forecast especially for those projecting full-year growth at the mid-four per cent to five per cent range,” he said.

MIDF Research Chief Economist Dr Kamaruddin Mohd Nor said by examining the robust expansion figures, one could see that Malaysia’’s economic growth was broad-based.

“On the supply side, services, manufacturing, construction, agriculture and mining were performing comparatively better in this quarter, notably the agriculture sector, which last year recorded a contraction but this year registered a turnaround, supported by double-digit growth in both oil palm and rubber,” he said.

Kamaruddin said the manufacturing sector’s performance, on the other hand, was boosted by the increase in external demand.

“We are expecting the current growth momentum to sustain for the rest of the year. Our GDP growth target for 2017 is 4.9 per cent,” he added.

Bank Negara Malaysia yesterday announced a  growth of 5.6 per cent in the first quarter of this year against 4.1 per cent registered in the same quarter of 2016, boosted by strong domestic demand and private expenditure.

It said the quarter’s performance was the best since the corresponding quarter of 2015 which saw GDP growing at 5.8 per cent. — Bernama

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