Economists say the positive projection remains dependent on the resilient domestic demand and external sector

By SHAHEERA AZNAM SHAH & ALIFAH ZAINUDDIN / Pic By MUHD AMIN NAHARUL

Malaysia’s economic expansion for the third quarter of 2017 (3Q17) is projected to reach up to 6%, after achieving a strong gross domestic product (GDP) growth in the first half (1H) of the year.

For the first six months of 2017, the GDP growth was recorded at 5.7%, surpassing analysts and the central bank’s projections between 4.3% and 4.8%. It was only 4% in the same period last year.

Economists said the positive projection on the country’s GDP remains dependent on the resilient domestic demand and external sector.

The sustained external factor, particularly the global demand, has raised Malaysia’s export and maintained it around 20% for 3Q17.

“It would likely be a positive surprise of 6%, supporting the continuing growth momentum of the 1H and 2H of the year,” Sunway University Business School Economics Prof Dr Yeah Kim Leng (picture) told The Malaysian Reserve (TMR).

“The country is also seeing the spillover effect from the domestic industry due to the higher domestic demand through consumption and investment.”

Yeah said the slight improvement in global economy signals a positive external environment, which enables it to support the country’s growth momentum.

“The European economies are seeing a sustained growth, as well as the US due to the improving sentiment in its labour market.

“If the external factors continue, it will provide a support to the global economy and offset the possible slight moderation in China.

“It is also in line with the International Monetary Fund (IMF) expectations for the global economy to sustain the growth momentum and hit a slight increase of 3.7% in 2018,” he said.

Meanwhile, MIDF Amanah Investment Bank Bhd chief economist Dr Kamaruddin Mohd Nor forecast 5.5% in GDP growth, with highlights on the resilience of the manufacturing sector.

“The trade balance for the manufacturing sector for 3Q17 was registered at RM26.7 billion, while last year’s performance was RM18.9 billion year-on-year. The substantial difference is also reflecting the strengthened quarterly performance,” he told TMR.

Bank Negara Malaysia will announce Malaysia’s 3Q17 GDP numbers this morning.

According to a Bloomberg poll, the country’s economic growth is expected to ease to 5%, lower than the 5.8% achieved in 2Q17.

The survey — based on the median forecast of nine economists — projected 3Q17 growth rates of between 3.7% and 5.8%.

The outlook on the majority of sectors has eased slightly after a faster than anticipated performance in the first two quarters of the year, driven by solid exports and strong domestic demand.

Despite the tapered stance, business sentiments remain optimistic for 3Q17.

Several financial institutions including the World Bank and IMF had revised Malaysia’s full-year GDP to 4.9% and 4.8% respectively, following the country’s strong 1H performance.

In June, World Bank Group senior country economist for Malaysia Dr Rafael Munoz Moreno said the “worst of the global economic slowdown is behind us”, adding that this was the first time in many quarters that an upgrade was made to the revision rather a downgrade.

The central bank, on the other hand, expects full-year growth to range between 4.3% and 4.8%, higher than the 4.2% GDP in 2016.