Malaysia’s economy to grow 4.8% in Q1, says RAM Ratings

• May 15, 2017

KUALA LUMPUR: Malaysia’s economy is expected to grow at a faster pace of 4.8% in the  first quarter ended March 31, 2017, underpinned by external demand due to stronger exports, says RAM Ratings.
The ratings agency said on Monday the growth will be higher than the 4.5% in the preceding quarter of 4.5% in Q4, 2016. 
RAM Ratings said the major factor for the stronger Q1 2017 growth is the sustained upward momentum in external demand, which has provided the main boost to growth amid resilient domestic demand. 
Bank Negara Malaysia is scheduled to release the Q1 2017 GDP data this Friday, May 19.

“The improvement in exports is attributable to both a broad-based increase in demand across regions as well as significant upside from the demand for investment-type goods, mainly due to the stronger growth of industrialised economies,” it said.  
RAM Ratings also pointed out port-oriented industries were recording more favourable output growth trends, as opposed to the more volatile and lower growth patterns displayed by their domestic-oriented counterparts. 
More specifically, consumer-related output growth has been lagging the recovery momentum of the other domestic-led sectors. 
“Although there is a marked improvement in labour market conditions compared to the slack through the last couple of years, retail sales growth is still heavily reliant on non-durables or necessities-type consumption, which has still not reverted to the growth rates of the pre-GST period,” said RAM Ratings’ economist Kristina Fong. 
“Although inflation remains elevated, we expect it to taper off in 2H 2017 as the low-base effects from the transport component the previous year become less pronounced. Hence, we do not expect inflation to be a key determinant in derailing the resilient growth momentum of private consumption this year,” she added.
Private investment growth will continue to be underpinned  by the continuation of infrastructure projects, although some upside may also stem from the return of some foreign investment, which has traditionally led the trade cycle. 
“As such, this will be a welcome spillover effect from the continued strengthening of our export growth. 
“On the whole, our full-year GDP growth forecast remains at 4.5%,” said the ratings agency.

Source:  http://www.thestar.com.my/business/business-news/2017/05/15/malaysia-economy-to-grow-4pt8pct-in-q1-says-ram-ratings/#EUQctTtxE0b9fxsL.99