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Malaysia’s Q1 GDP growth likely cooled on weak demand, exports


© Reuters. A view of the Kuala Lumpur city skyline in Malaysia August 15, 2017. REUTERS/Lai Seng Sin/File Photo

By Sujith Pai

BENGALURU (Reuters) – Malaysia’s economic growth probably slowed in the first quarter, hit by tepid consumption and declining exports, a Reuters poll of economists showed.

The Southeast Asian economy probably expanded 4.8% in the January-March quarter from a year ago, the median forecast of 21 economists polled from May 2 to 9 showed, down from the fourth quarter’s rate of 7.0%.

Forecasts for annual gross domestic product (GDP) growth, set to be released on Friday, ranged from 3.7% to 6.2%, underscoring the uncertain outlook for the trade-reliant economy.

“Slowing export-oriented manufacturing activity amid an uncertain global economic environment was the key factor behind the deceleration, similar to trends in other externally oriented economies in the region,” said Chua Han Teng, economist at DBS.

“Domestic demand momentum also likely eased, but should have outperformed vs the external sector, supported by household spending, tourism recovery, and infrastructure investment.”

Malaysia’s economy faces a significant downside risk from a combination of factors, including a global economic slowdown and the deceleration of demand from major trading partner China.

Economic growth was expected to average 4.0% this year, in line with Bank Negara Malaysia’s (BNM) forecast, a separate Reuters poll showed. The poll also showed growth was projected to rise to 4.6% in 2024.

“China’s rebound hasn’t been import-intensive enough to support goods-producing firms, while goods’ demand from advanced economies has been weak,” said Shivaan Tandon, emerging Asia economist at Capital Economics.

“Looking ahead, we think the economy is set to register below-trend growth this year. Exports are likely to remain under pressure if, as we expect, advanced economies undergo recessions in the second half. Domestic demand is also likely to struggle.”



This story originally appeared on Investing

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