November 14, 2018 / 6:31 AM / in 5 months

Malaysia's third-quarter GDP growth seen rising slightly to 4.6 percent year-on-year: Reuters poll

KUALA LUMPUR (Reuters) - Malaysia likely had slightly faster economic growth in the third quarter, a Reuters poll showed, which would snap a three-quarter streak of slowing expansion even as external demand remains weak.

FILE PHOTO: People shop for shoes at a mall in Malaysia's southern city of Johor Bahru April 25, 2017. REUTERS/Edgar Su

The median forecast from 15 economists is for annual growth of 4.6 percent in July-September, a marginal rise from the previous quarter’s 4.5 percent pace.

Individual forecasts for the quarter - the first full one with Mahathir Mohamad back as prime minister - ranged from 4.1 to 5.0 percent.

Malaysia’s forecast for full-year growth this year is 4.8 percent. In 2017, the economy expanded 5.9 percent.

Standard Chartered said private consumption likely remained strong even after the introduction of a sales tax to replace a broader goods and services tax (GST) that Mahathir had promised, before his coalition’s stunning election victory in May, to scrap.

The absence of GST in July and August “may have boosted private spending” in those months, the bank said in a Nov. 9 note.

However, overall GDP growth in the quarter for the trading nation was crimped by weak crude oil and natural gas production, it added.

Third quarter growth would have been reined in by slower exports compared with the previous three months, contributing to softer domestic indicators, according to Euben Paracuelles, an economist with Nomura.

“The spillover into the rest of the economy in Malaysia tends to be fairly significant and quick because of the size of the export sector,” he said.

Exports rose 6.7 percent in September from a year earlier, rebounding from a 0.3 percent annual drop a month earlier, according to government data.

However, the trade surplus for July-September of 25.2 billion ringgit ($6.01 billion) was 4.1 percent smaller than that of one year earlier. In April-June, the surplus was 27.2 billion ringgit, or a 12.9 percent annual rise.

Last week, Malaysia’s central bank left its benchmark rate unchanged at 3.25 percent. It raised its rate by 25 basis points in January, its first hike since July 2014.

On Nov. 2, Mahathir’s administration presented a proposed 2019 budget that includes cuts in public spending and increased revenue from privatizing infrastructure assets and a one-off dividend of 30 billion ringgit ($7.16 billion) from state energy firm Petronas.

Reporting by Joseph Sipalan; Editing by Richard Borsuk

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