Malaysia: GDP loses momentum in Q3 – UOB

Senior Economist Julia Goh and Economist Loke Siew Ting at UOB Group assessed the latest release of Q3 GDP figures.

Key Quotes

“Real GDP rose at a slower pace of 4.4% y/y in 3Q19 (from 4.9% y/y in 2Q19), in line with market consensus but above our estimate (4.1%). Year-to-date, GDP rose 4.6% in Jan-Sep”.

“Private consumption was the prime driver, which grew 7.0% and contributed 4.1% pts to headline GDP in 3Q19. Other positive contributors were government consumption and net exports. All key sectors expanded except for mining and construction”.

“Our preliminary estimates suggest that GDP growth could pick up to 4.5% in 4Q19 with higher seasonal spending and accelerated government spending. A turnaround in the mining sector could also alleviate the drag on growth. As such, we maintain our full-year growth forecast of 4.6% in 2019 and 4.4% in 2020″.

“Given the slower trend growth below Malaysia’s potential output of 4.8% – 5.0%, we have penciled in a 25bps cut in the Overnight Policy Rate (OPR) to 2.75% in 1Q20. This is to safeguard domestic growth amid lingering trade uncertainties and muted investments”.