Malaysia GDP growth down 4.4% in Q3

Private consumption led gains but was significantly offset by declines in other sectors.

Malaysia GDP growth was lukewarm at 4.4% YoY in Q3 2019, with private consumption being the main contributor amidst slowdowns in the region.

Private consumption was the driver to overall GDP growth despite slowing to 7.0% in Q3 from 7.8% in the previous quarter whilst contributing 4.1% to headline GDP. This was supported by sustained income, employment growth and government measures, according to UOB analysts Julia Goh and Loke Siew Ting. Government consumption also went up 1.0% YoY due to positive emolument growth.

Private investments slid down 0.3% YoY due to lower capital spending across major sectors, while public spending contracted 14.1% YoY dragged down by lower capital spending by the federal government. Net exports posted 1.0% to headline growth with a wide decline in imports (-3.3%) compared to exports (-1.4%).

“The trend of weakening growth in Malaysia is not a surprise. All high frequency indicators such as customer sentiment, business sentiment, motor vehicle sales, and retail sales pointed to a deceleration in the third quarter, reflecting a clear deterioration in domestic demand,” HSBC Global Research analyst Joseph Incalceterra noted.

HSBC expects a further downturn to 4.1% in 2020 from 4.5% this year, reflecting its forecast on China, the US, the Eurozone and Japan. On the other hand, UOB maintains its full-year growth forecast of 4.6% in 2019 and 4.4% in 2020.

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