Malaysia's 1Q13 GDP growth predicted to 'ease off' from 6.4% expansion

But it should still be healthy.

According to DBS, growth outlook is still rosy despite the external headwinds. The first quarter GDP growth to be announced this Wednesday should provide more evidence of that.

Though growth will likely ease off from the rapid 6.4% YoY expansion registered in the final quarter of last year, it should still remain fairly healthy at about 6.0% in the first quarter.

Here's more from DBS:

But sequential growth momentum will moderate more significantly to 4.8% QoQ saar, from 9.0% previously. This largely reflects a bottoming-out and indeed, a slower than expected growth momentum in the external environment.

Nonetheless, the outlook for the Malaysia economy should remain positive. As the central bank has rightly pointed out in its recent policy statement, “...while the external sector is affected by global developments, domestic demand has continued to provide support to growth.”

Accordingly to the central bank, investment activity and private consumption have remained firm and is expected to continue to sustain a steady growth. Specifically, “...private consumption is supported by sustained income growth amid stable labour market conditions, while investment activity is being led by capital spending in the domestic-oriented sectors, and progress in the implementation of infrastructure projects”, said the authority.

Essentially, this implies a fairly healthy growth momentum and headline GDP growth should remain within the medium term potential growth range of about 5-6% in the coming quarters. We continue to expect a full year GDP growth of 5.5% in 2013.