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Malaysia: Domestic demand, private sector to drive growth
KUALA LUMPUR: Despite recording a moderate gross domestic product (GDP) growth of 4.4% in the third quarter (Q3) of this year, analysts and economists remain confident of Malaysia’s future prospects, suggesting that domestic demand and the private sector will be the key drivers of economic growth, going forward.
On Friday, Bank Negara announced that the country’s GDP stood at 4.4% in Q3, driven by household spending, higher private investment and lingering effects of one-off supply shocks.
The central bank said that for the first nine months of the year, the economy expanded by 4.7% and was on track to register a growth of 4.8% this year.
Malaysian Institute of Economic Research (Mier) executive director emeritus professor Zakariah Abdul Rashid said the Q3 GDP growth was within expectation since the July and August trade figures were unconvincing.
“The growth has to be driven by the Consumer Price Index and as what we have seen from the data just released,” he told Bernama.
Zakariah also said the Malaysian economy was in the midst of adjusting itself to the current economic situation and Mier has forecast 4.7% GDP growth this year.
“In the medium and longer terms, the electric and electronics sector may rebound and contribute to the country’s growth.
“The fundamentals are intact but weaker external demand is limiting overall growth performance. Domestic demand is still going to drive the growth in the next quarter,” he added.
Meanwhile, Institute for Democracy and Economic Affairs (Ideas) director of research Laurence Todd said future growth will come from the private sector-led innovation and entrepreneurship.
“This can be unlocked if the government follows through on promises to reduce the government’s role in the economy and reform procurement to make it more competitive and transparent,” he said.
Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid also opined that the private sector could further drive economic growth.
He said private sector spending was the main pillar for growth, in particular, private consumption which grew by 9% in 3Q18, which was way beyond the trend level of 6.9%.
“The zero per cent Goods and Services Tax, strong employment and wage growth as well as positive consumer sentiment are the main reasons for higher consumer spending in this quarter.
“Similarly, private investment also reported a commendable growth of 6.9% as manufacturers, especially those in the export-oriented industries, actively upgraded their production capacity,” he said. — Bernama
Source: https://www.thestar.com.my/business/business-news/2018/11/19/domestic-demand-private-sector-to-drive-growth/#wMgCTvUzXHXkby67.99