Malaysia’s economy grew at a slower pace in the first quarter than the previous three months, dragged down by weaker trade and investment in the export-reliant nation.
Gross domestic product expanded 4.5% from a year ago, down from 4.7% in the fourth quarter, the central bank said in Kuala Lumpur on Thursday. The median estimate in a Bloomberg survey of 22 economists was for growth of 4.3%.
- Growth in domestic demand weakened to 4.4% in the first quarter from 5.7% in the previous three months, on the back of a slump in private and public-sector investment. The central bank said consumer spending will likely moderate but remain firm
- A rebound in agriculture and solid growth in services helped to underpin the economy’s expansion
- Exports contracted in February and March, resulting in quarterly growth of 0.1%. For trade-reliant Malaysia, the renewed tariff tensions between the U.S. and China poses a serious threat to the economy. Governor Nor Shamsiah Mohd Yunus told reporters that if the trade war worsens it will affect all countries, including Malaysia
- The central bank, which cut interest rates last week, is forecasting growth of 4.3% to 4.8% this year, compared with the government’s projection of 4.9%. Growth risks remain tilted to the downside due to global factors, the bank said on Thursday
- For a detailed breakdown of the data, click here
- The ringgit extended gains to trade 0.2% higher at 4.1637 per dollar, from 4.1700 before the data was released. The central bank outlined steps to boost market liquidity partly in response to FTSE review of Malaysian bonds
- The base year for the GDP data was changed to 2015 from 2010 to reflect new data sources, changes to methodologies and to adhere to international practice
- Malaysia is banking on the private sector to boost investments as well as China’s Belt and Road Initiative to support growth by attracting foreign investment and improving connectivity with the global economy, said Minister of Economic Affairs Azmin Ali
- Prime Minister Mahathir Mohamad recently revived billion-dollar infrastructure projects that were put on hold in 2018 — such as the $11 billion East Coast Rail Link and the $34 billion Bandar Malaysia property and transport hub — which could start translating to stronger growth in the second half, according to Bank Islam Malaysia Bhd