Malaysia: Economic growth slows in the first quarter
May 18, 2011
The economy lost momentum in the first quarter of 2011 expanding a more moderate 4.6% over the same period last year compared to the 4.8% tallied in Q4 2010. In addition, the print undershot market expectations of a 4.9% increase. The deceleration partially reflects an unfavourable base effect, as GDP climbed a buoyant 10.1% in the first quarter of 2010. That said, the deceleration was mostly driven by slower growth in the external sector, as the 8.4% increase in imports (Q4 2010: +3.5% year-on-year) outpaced a rise in exports of 3.7% (Q4 2010: +1.7% yoy). Against this backdrop, the net contribution of the external sector dropped further from minus 1.7 percentage points in the fourth quarter to minus 4.0 percentage points in the first quarter of 2011. On the other hand, domestic demand improved markedly compared with the previous quarter, expanding 10.3% over the same period last year (Q4 2010: +7.2% yoy). Gross fixed investment moderated from an expansion of 10.0% in the fourth quarter to rise 6.5%, while private consumption rose to 6.7% (Q4 2010: +6.4% yoy). Meanwhile, public spending surged 6.1% after recording a virtually flat reading in the previous quarter, which supported total consumption growth (Q4 2010: +4.8% yoy; Q1 2011: +6.6% yoy). At the sector level, the slowdown was widespread as all components moderated compared to the previous quarter. Services slowed from 6.1% to 5.9%, while manufacturing decelerated from 6.2% to 5.4%. The construction sector moderated from a 5.6% expansion to growth of 3.8%.