KUALA LUMPUR (Reuters) - Malaysia’s economic growth in the fourth quarter is expected to have slowed to its weakest since mid-2016 on weaker private consumption and external demand, a Reuters poll showed.
The median forecast from the poll of 13 economists was for growth of 4.2% in October-December compared with a year earlier, the slowest pace since the second quarter of 2016. That will be down from 4.4% in the third quarter and 4.9% in April-June.
Individual forecasts ranged from 3.4% to 4.6%.
Economic growth in Southeast Asia’s third-largest economy over the fourth quarter was likely weighed down by weakness in industrial production and exports, and slowing retail sales, according to Gareth Leather, senior asia economist with economic research consultancy Capital Economics.
“Overall, we are penciling in growth of 4.0% y/y, down from 4.4% in Q3,” Leather said in a research note on Friday.
Factory output in December grew 1.3% from a year earlier, below expectations and slower than the 2.0% expansion from the previous month. Industrial production rose 0.3% in October, its slowest pace is over six years.
However, exports from trade-reliant Malaysia rose 2.7% in December, beating estimates and snapping a four-month streak of negative growth.
Growth in the fourth quarter may have had a boost in December from frontloading of manufacturing activity and potentially exports ahead of the Lunar New Year, Standard Chartered said in a research note on Friday.
But a preemptive cut by Malaysia’s central bank to its benchmark interest rate in January indicates that the economy will likely face some difficulty in meeting growth targets, Standard Chartered said.
Prime Minister Mahathir Mohamad on Monday said the government expects growth to come in at 4.8% in 2020, “despite challenging times”.
“After surprising markets with a pre-emptive 25 bp cut at its January meeting, the Monetary Policy Committee’s (MPC’s) policy statement noted that delays in project implementation
could pose a downside risk to growth,” Standard Chartered said.
“Furthermore, we have not observed a pick-up in capital goods imports. While the central bank only cut pre-emptively, it may be open to further cuts if the coronavirus outbreak worsens.”
The ongoing coronavirus outbreak, which originated from Wuhan city in central China, has so far killed over 900 people and infected more than 40,000 worldwide. Malaysia has so far confirmed 18 cases of coronavirus infection.
(This story is refiled to corrects GDP forecast to 4.8% (not 4.5%) in paragraph 10 as per the official correction)
Editing by Jacqueline Wong