Why Malaysia's 4.3% GDP growth wasn't too impressive

Agricultural production was softer.

According to UBS, Malaysian real GDP expanded 4.3% on the year in Q2, up from 4.1% on the year in Q1 but below the 4.7% consensus. Growth on the quarter was 1.4% seasonally adjusted, healthy enough in itself but not a particularly strong recovery from the 0.4% decline in Q1 2013.

Here's more:

Soft agricultural production offset the bounce in manufacturing after a weak Q1. In terms of spending, final domestic demand growth of 7.3% yoy would have been weaker without an election related leap in government consumption growth to 11.2% yoy.

Slower Federal Government investment spending was offset by 'private' investment in traditionally public sector linked oil and gas and infrastructure.

In short, without the backing of government we suspect Malaysian domestic demand would have been weaker and more consistent with the 5.2% yoy decline in exports in Q2.

We look for better export growth in 2014 and keep our real GDP projection of 5% for that year, but revise lower our 2013 real GDP forecast to 4.3% (from 4.7%) on the weaker than expected Q2 GDP figure.