Malaysia's GDP grows 5.6% in 1Q17

Thanks to private consumption’s upside surprise.

According to Standard Chartered Global Research, Malaysia reported strong 1Q17 GDP growth of 5.6% y-o-y.

“Given the strong start to the year, we raise our full-year growth forecast to 4.6% from 4.1% previously. However, this implies that we believe growth momentum may have peaked in 1Q17,” Standard Chartered said.

Private consumption showcased an upside surprise, providing strong support. Household spending accounted for 3.6ppt of growth, the most in eight quarters, despite falling wage growth. Investment was the second-largest contributor to growth, contributing more strongly than in 1Q16.

The bulk of the increase came from private investments (2.3ppt), while public investments contributed 0.24ppt. Government spending also provided a boost. Net exports subtracted 1.2ppt from headline GDP growth as strong capital-goods imports moderated the recent strength in exports.

By sector, communications, finance and real-estate activity picked up, with retail trade holding up strongly. Manufacturing also picked up on increased external demand for electronics, and the agricultural sector surprised to the upside, boosting GDP growth on the back of increased production due to higher crude palm oil prices.