Govt sticks to 4.7% GDP growth forecast for 2019

by MARK RAO/ pic by RAZAK GHAZALI

MALAYSIA can achieve its economic growth target of 4.7% in 2019 with a strong fourth-quarter (4Q) showing helping to mitigate the broader impact from the protracted China-US trade war and slower global growth.

Finance Minister Lim Guan Eng said 4Q is typically a strong quarter in terms of economic growth.

The government is thus sticking to its 4.7% economic growth forecast, as measured by GDP, for the year, he said.

“Normally, 4Q is a stronger quarter, so we feel the economy will be able to show a better performance and help to meet our original estimate of 4.7% growth,” he told reporters in Kuala Lumpur yesterday.

He said the US-China trade war, which rattled financial markets and put major global trade flows at risk, has resulted in slight weakening of the Malaysian economy.

This was especially apparent in 3Q, when the GDP growth moderated to 4.4% year-on-year — the lowest growth in 12 months — due to the slowdown in key sectors and decline in mining and construction activities.

The majority of domestic demand components and net exports registered slower growth as well.

The 3Q performance brought the average economic growth for the first nine months of 2019 to 4.6% after registering GDP growth of 4.5% and 4.9% in the 1Q and 2Q respectively.

The country’s overall growth is expected to come within projection, and the pace of growth is expected to sustain going into 2020 as well, according to Bank Negara Malaysia.

Economic activity will be supported by private sector, particularly household spending which will be bolstered by the continued expansion in employment and income, the central bank said.

In an economic outlook report, Lim said the country’s GDP is forecast to grow by 4.7% in 2019, and by 4.8% next year despite prevailing external headwinds.

To achieve the 4.7% economic growth target for the year, it will require Malaysia’s GDP to expand by at least 5% in 4Q.

Historically, the 4Q is a strong quarter for economic growth in Malaysia, with GDP growth coming in at 5.7% in 4Q17 and 4.7% in 4Q of 2018.