Malaysia: Economic growth rebounds in the third quarter
November 18, 2011
Economic growth improved in the third quarter due to a stronger expansion in the domestic sector. In the third quarter, GDP grew 5.8% over the same period last year, which was above the revised 4.3% increase recorded in the second quarter (previously reported: +4.0% year-on-year). The solid reading overshot market expectations of a 4.8% rise and, in fact, represented the fastest pace since Q2 2010. The acceleration was mostly driven by faster growth in the domestic sector, with all components expanding over the previous quarter. Public spending expanded 21.7% (Q2: +6.6% yoy), while private consumption rose 7.3%, which was above the 6.4% increase registered in the previous quarter. Gross fixed investment accelerated from a 3.2% increase in the second quarter to a 6.1% expansion in the third. The external sector remained robust despite the deepening European crisis, floods in Thailand and cooling global demand. Exports grew 4.2% in the third quarter, virtually mirroring the 4.1% increase recorded in the previous quarter. Imports matched the previous quarter's 3.2% rise. As a result, the external sector's net contribution to overall growth was unchanged in the third quarter at plus 1.3 percentage points. At the sector level, the improvement was widespread, with all sub-index recording gains compared to the previous quarter. Agriculture jumped from a 6.9% rise in the second quarter to an 8.2% expansion in the third. Services expanded 7.0% in the third quarter (Q2: +6.8% yoy) and production of manufactured goods grew 5.1% (Q2: +2.1% yoy), partially due to normalisation in the supply chain disruptions caused by the Japan earthquake. The construction sector increased 3.1% (Q2: +0.6% yoy), whereas the mining sector continued to decline due to lower production of crude oil (Q3: -6.1% yoy; Q2: -9.2% yoy).