Malaysia: GDP growth slows to lowest rate in over two years
November 13, 2015
In the third quarter of 2015, GDP expanded 4.7% over the same period of the previous year, the slowest rate since Q2 2013. The figure marked a deceleration compared to the 4.9% growth tallied in Q2, and was in line with market expectations. The figure represented the slowest rate of expansion in nine quarters. The Department of Statistics indicated that decelerating domestic demand continued to drag on growth in the third quarter, as it has done in the past two quarters. In quarterly terms, seasonally adjusted GDP increased 0.7%, decelerating from Q2’s 1.1%.
On the domestic front, private consumption grew 4.1% in Q3, which was down from last quarter’s 6.4% expansion and marked a record breaking low for the series. The growth in private consumption was driven by spending on food and beverages, transportation and communication. Government consumption slowed in Q3, registering a 3.5% expansion (Q2: +6.8% year-on-year). Gross fixed investment growth saw a sharp recovery in Q3, climbing from a 0.5% increase in Q2, to a 4.3% expansion in Q3. Q2’s deceleration in fixed investment was caused mainly by a contraction in public sector investment after several large scale projects were completed in the first half of the year. Investment in the third quarter is much closer, although still slightly below, the long run average.
In the external sector, exports of goods and services recovered and grew 3.2% in Q3, which contrasted the 3.7% contraction in Q2 and marked the strongest figure in five quarters. Imports also grew 3.2% in Q3, again contrasting last quarter’s contraction of 2.8%. Consequently, the external sector’s net contribution to overall growth improved from Q2’s minus 1.0% to plus 0.3% in Q3.
Author: Robert Hill, Economist