Malaysia: Economic growth continues to moderate in the second quarter
August 17, 2011
Economic growth lost momentum in the second quarter of 2011, as the manufacturing sector slowed down on the back of supply chain disruptions stemming from the Japanese earthquake, while private demand remained strong. In the second quarter, GDP grew 4.0% over the same period last year, which was below the 4.9% tallied in the first quarter, but overshot market expectations of a 3.8% increase. The deceleration was mostly driven by slower growth in the domestic sector, with all components moderating over the previous quarter. Public spending moderated sharply to 4.0% (Q1: +8.9% year-on-year), while private consumption expanded 6.4% yoy, which virtually mirrored the 6.7% tallied in the previous quarter. Gross fixed investment slowed from a 6.5% expansion in the first quarter to 3.2%, which represented the lowest reading since Q4 2009. On the other hand, the net contribution of the external sector rebounded from minus 6.5 percentage points in the first quarter to plus 1.3 percentage points, as exports accelerated 4.1% (Q1: +1.4% yoy), while imports rose 3.2% (Q1: +8.4% yoy). Exports benefited from surging regional demand and high commodity prices. At the sector level, the slowdown was widespread as three out of the four components moderated compared to the previous quarter, with manufacturing slowing from a 5.6% expansion in the first quarter to 2.2% in the second and services moderating only marginally to 6.3% (Q1: +6.4% yoy). The primary commodities sector fell 1.6% (Q1: -3.6% yoy) while construction and industry gained 0.5% (Q1: +3.8% yoy).