Malaysia: Higher GDP headline number belies weak momentum – ANZ

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According to analysts at ANZ, Malaysia’s better-than-expected growth belies the weak underlying momentum.

Key Quotes

“Though more moderate, private consumption increased at an impressive rate of 7.6% y/y (Q4 2018: 8.4% y/y), Growth of 6.3% y/y in public consumption was also supportive.”

“Export growth was flat at 0.1% y/y, due to weakness in petroleum and palm oil related exports. At the same time, imports contracted by 1.4% y/y upon weaker intermediate and capital goods imports. As a consequence, net trade made a positive contribution to growth, albeit slightly lower than in Q4 2018. Combined with a lower deficit in the primary income accounts, the improvement in net trade helped in delivering the largest current account surplus in nearly five years (MYR16.4bn).”

“Despite growth in Q1 overshooting consensus estimates, the details are not very promising. In particular, a contraction in investment alongside a loss of momentum in the manufacturing and services sectors is worrisome.”

“Renewed trade tensions have further clouded the export outlook, even as external demand, particularly for technology products, remains subdued. On a positive note, the successful re-negotiation of infrastructure projects could provide some support to investment.”

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