Economists predict 5.19pc Q1 growth for Malaysia

KUALA LUMPUR: The economy likely grew by an annualised clip of 5.19 per cent in the first quarter this year, making it the seventh consecutive quarter Malaysia has achieved growth of above five per cent.

Source from (Business Times): http://www.btimes.com.my/Current_News/BTIMES/articles/rup1400/Article/
Published: May 16, 2013



External demand remains a concern, said economists, although their expectation points to an improvement by year-end.

Bank Negara Malaysia will release data on the performance of economic activities between January and March today.

Based on a quarter-on-quarter comparison, the first quarter is expected to come in slow after "expanding at a blistering pace" of 6.4 per cent, said economist Dr Chua Hak Bin of Bank of America Merrill Lynch. "Weak exports during the first quarter likely dampened growth, while robust domestic demand supported growth."

Exports contracted 2.5 per cent in the quarter, while trade surplus shrunk to RM16.6 billion in the first quarter from RM25.6 billion in the fourth quarter.

Chua said infrastructure spending likely supported investments, while generous government handouts before the general election likely supported consumer spending.

HSBC Bank and Standard Chartered Bank also said domestic-driven growth, led by private consumption and investments, likely bounced during the period.

Standard Chartered Bank economist Jeff Ng cautioned that weaknesses in exports can persist over the next few months, depressing the current account.

Malaysian Rating Corp Bhd chief economist Nor Zahidi Alias described the outlook for this year as promising as the external sector is set to improve on the back of further improvement in the United States economy, which is expected to grow between 2.3 and 2.8 per cent.

This, he said, implies that ISM Manufacturing Index new orders will likely improve further, benefiting an export-oriented economy like Malaysia.

The strong domestic economy, underpinned by a tight labour market and rising private investments, will further support expansion.

"Private consumption will also be supported by easy credit, which will lead to another year of resilient growth.

"We estimate Malaysia's marginal propensity to consume to be about 0.53, meaning that consumers tend to spend 53 sen for an additional RM1 increase in their income," Nor Zahidi said.

Citi also estimated that the first-quarter average seasonally-adjusted capital good imports are 13 per cent higher than the fourth quarter of 2012, while consumption good imports for the first-quarter 2013 level is 6.3 per cent below the fourth-quarter average.

"The long implementation pipeline of projects suggests capital good imports could rise further this year," it added.