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Analysts at Standard Chartered point out that Malaysia reported firm Q1-2018 GDP growth of 5.4% y/y and the q/q seasonally adjusted growth rate was also decent, at 1.4%, faster than 0.9% in Q4-2017 and in line with the 2017 average.

Key Quotes

“We maintain our 2018 growth forecast of 5.3%.”

“We observed a divergence in performance in the Q1-2018 GDP print, with private consumption being the primary growth driver. Net exports recorded a huge positive contribution owing to a sharp decline in imports (as export growth actually eased versus Q1-2017). Meanwhile, private-sector investment and government expenditure were soft, on lower capital spending and reduced expenditure on supplies and services, respectively.”

“The new government announced the effective removal of the Goods and Services Tax (GST) from 1 June 2018. We therefore see downside risk to our 2018 inflation forecast, but hold off on revising our forecasts pending clarity on the re-introduction of the Sales and Services Tax (SST).”