This is what's more shocking than Malaysia's 5.2% GDP growth

It's not the strength in domestic demand.

According to Nomura, exceeding expectations, GDP grew by 5.2% y-o-y in Q3 from an upwardly revised 5.6% in Q2 (Consensus: 4.8%; Nomura: 4.5%).

Here's more from Nomura:

By our estimates, the economy grew 1.1% q-o-q, seasonally adjusted (sa). The strength in domestic demand continued to offset weaker external demand. Investment spending continued to impress – expanding by 22.7% y-o-y in Q3 from 26.1% in Q2 – on robust private and public investment that reflects ongoing projects under the Economic Transformation Programme (ETP).

Growth in private consumption also remained strong at 8.5%y-o-y in Q3 from 8.8% in Q2, supported by low unemployment and government handouts.

BNM estimates that about 0.8 percentage points (pp) of private consumption growth is attributable to government assistance, albeit this is much lower than the 2.8pp contribution in the previous two quarters.

Overall, domestic demand contributed 9.8pp to headline GDP growth in Q3 (from 11.8pp in Q2), which more than offset the increased negative contribution from net exports (-6.8pp in Q3 from -4.9pp in Q2). Consistent with regional trends, export growth was -3% y-o-y in Q3 after rising by 2.1% in Q2, while import growth rose 4.4% in Q3 (versus 8.1% in Q2).

On the supply-side, the construction sector saw further strong growth (up 18.3% in Q3 from 22.2% in Q2) due to transport, utility, and oil & gas sector projects – all of which are prioritized under the ETP.

But more surprising to us was the stronger growth in the services sector, which was up 7% y-o-y in Q3 from 6.6% in Q2 and the agriculture sector, which grew 0.5% y-o-y in Q3 from a 4.7% contraction in Q2. The manufacturing and mining sectors grew by 3.3% and -1.2%, respectively, in Q3 from 5.6% and 2.3% in Q2, in line with our estimates.