Malaysia: GDP growth decelerates in Q3 amid slower investment and exports
November 14, 2014
In the third quarter, GDP expanded 5.6% over the same period of last year. The figure marked a deceleration compared to the 6.5% rise tallied in the second quarter but was in line with market expectations. The result, which marked the slowest pace of growth since Q4 2012, shows that resilient private consumption made up for weak investment and a struggling external sector.
On the domestic front, private consumption grew a significant 6.7% in Q3, which was slightly faster than in the previous quarter (Q2: +6.5% year-on-year) and somewhat surprising given that households are grappling with higher costs as the government reduces subsidies. Gross fixed capital formation dropped from a 7.2% expansion in Q2 to a 1.1% rise in Q3, which marked the weakest growth in five years. Meanwhile, public spending rebounded from a 0.5% contraction in Q2 to a 5.3% increase in Q3.
In the external sector, exports of goods and services grew only 2.8% in Q3, marking a deceleration over the 8.8% increase tallied in Q2 and the slowest pace of growth since Q2 2013. Imports grew 2.2% in Q3, which was down from the 3.9% increase tallied in Q2. Consequently, the external sector’s net contribution to overall growth slipped from 4.5 percentage points in Q2 to 0.7 percentage points in Q3.
Author: Carl Kelly, Economist