The real gross domestic product (GDP) of Malaysia is expected to move at a slower pace of 4.4% in the third quarter of 2015 from 4.9% recorded in the second quarter of the year, according to RHB Research.
The research house said recently that industrial production growth picked up to 5.1% in September from 2.3% in August but was weaker compared with 6.1% in July, according to a report by Bernama.
“This was mainly reflected in the acceleration in the manufacturing and electricity output while mining production rebounded during the month. The former was aided by the sharp drop in the ringgit, making Malaysia’s export products more attractive to foreign buyers,” RHB Research said.
As manufacturing production picked up, RHB Research said manufacturing sales growth accelerated to 5.4% in September from 0.8% in August and a 1.3% contraction in July.
“As a whole, industrial activities improved slightly in Q3 compared to Q2, supported by resilient electrical and electronics and other exports given the weak ringgit.
“Nonetheless, consumers and businesses will likely remain cautious, as indicated by a further slowdown in domestic-oriented manufacturing and services activities, given that they require more time to adjust their spending patterns,” it added.
Despite the challenges faced by the global economy, the research house said Malaysia is envisaged to sustain its growth during the year and into 2016.
“This will likely sustain the growth for the country’s export and manufacturing sales in the periods ahead,” it said.
It said the impact from lower oil prices on oil and gas investment and the earlier policy tightening over the last two years to control rising household debts will likely continue to constrain domestic demand growth in 2016.
“We expect Malaysia’s real GDP to sustain at 4.9 per cent in 2016, a tad higher than an estimate of 4.8 per cent in 2015,” RHB Research said.
Photo: LDP FR1
