Malaysia 2Q GDP growth pace seen picking up

By REUTERS / Pic By MUHD AMIN NAHARUL

MALAYSIA’S economic growth pace rose in the second quarter (2Q), helped by slightly stronger exports and manufacturing, a Reuters poll showed.

The median forecast from the poll of 13 economists was for an annual growth of 4.8% in April-June, faster than the 1Q’s 4.5% pace.

Individual forecasts ranged from 4.3% to 5%. If the pace tops 4.5%, Malaysia will be the first South-East Asian country to report an acceleration in growth in the 2Q.

“Malaysia is a notable exception to the export-led GDP slowdown that most of the Asian and global economies have been suffering currently amid the intensified global trade war and a technology downturn,” said ING Bank Asia economist Prakash Sakpal.

“This was associated with acceleration of manufacturing growth over the same quarter as was evident from the monthly industrial production figures,” he added.

ING’s forecast for the quarter is 4.8% growth.

In April and again in May, Malaysia’s industrial production rose 4% from a year earlier, the strongest since October, supported by gains in electricity generation and mining.

While Malaysia, as a large exporter of intermediary goods to China, remains vulnerable due to the China-US trade war, its exports for the 2Q were marginally higher than a year earlier, supported by the demand for palm oil, oil and gas and manufactured goods.

Malaysia is South-East Asia’s third-largest economy, and its major exports include palm oil and liquefied natural gas.

Julia Goh (picture), Malaysia-based economist with UOB Bank (M) Bhd, said in a note on Tuesday that she expects private consumption to remain “resilient” in the quarter, aided by demand for Islamic holidays, private sector bonus payout and financial assistance to civil servants.

UOB predicts a decent growth of 5% year-on-year for 2Q, but Goh said she doubts a growth rebound is sustainable given “intensifying global downside risks tied to trade tensions between major countries, slower Chinese economy, the possibility of a no-deal Brexit and a potential credit default in Argentina”.

To spur growth, Malaysia’s central bank in May made its first rate cut since 2016 by 25 basis points to 3%. — Reuters