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Faster Malaysian growth seen in Q3
PETALING JAYA: Malaysia’s economy is likely to have grown faster in the third quarter of this year amid an increase in private spending during the consumption tax holiday period.
A Reuters poll showed the median forecast from 15 economists is for Malaysia’s gross domestic product (GDP) to grow 4.6% year-on-year (y-o-y) between July and September.
This compared with the growth of 4.5% (y-o-y) posted in the preceding quarter.
Bank Negara is scheduled to announce the country’s third-quarter 2018 GDP performance tomorrow.
According to CIMB Research, front-loaded purchases by local consumers are expected to have lifted GDP growth for Malaysia for the quarter in review.
“Pent-up demand during the consumption tax-free period was a silver lining for third-quarter 2018’s GDP growth even though the drag from commodities deepened,” the brokerage wrote in its Nov 9 note.
“Overall, we expect GDP growth to improve to 4.6% y-o-y in the third quarter of the year,” it added.
Similarly, TA Research said GDP growth for the three months to September would likely have accelerated on a favourable base effect.
“Despite the weak mining result, we still opine that the third-quarter 2018 GDP growth would remain resilient premised on the favourable third-quarter 2017 trade and manufacturing data,” the brokerage said in its recent note.
“Growth will remain privately-led, supported by steady private investment amid resilient consumer spending on the back of the tax holiday period,” it explained.
Echoing a similar view, Standard Chartered said private consumption was strong despite the reintroduction of the sales and service tax, or SST, on Sept 1 to replace the goods and services tax (GST) that was abolished on June 1. The bank said the absence of the GST in July and August may have boosted private spending during those months. But overall GDP growth between July and September was likely to have been weighed by weak crude oil and natural gas production.
Contrary to market view, MIDF Research said Malaysia’s third-quarter GDP growth would likely have slowed to 4.2% y-o-y – the lowest in nine quarters – despite strong private consumption.
“Malaysia’s economic activities sustain on an upward trajectory amid resilient domestic spending,” the brokerage said.
“However, heightened trade tension, a slowdown in industrial activities and sluggish crude palm oil prices are among dragging factors in economic growth for the third quarter,” it explained.
Source: https://www.thestar.com.my/business/business-news/2018/11/15/faster-growth-seen-in-q3/#MoMJplBMBepXRKs2.99