AmWatch - Econ Watch : GST strikes and economy weeps in 2Q15, 27 Jul 2015

FOCUS OF THE DAY

Econ Watch : GST strikes and economy weeps in 2Q15

We maintain our full-year GDP estimate for 2015 at 5.2% (vs. 6.0% in 2014), pending the upcoming GDP release for 2Q15 on 13 August. However, growth in 2Q15 had probably moderated to 4.3% from +5.6% in 1Q15. Domestic demand will likely be supportive of growth in 2Q15, albeit at a moderate pace. In particular, the slowdown in private consumption coupled with weaker-than-expected global demand signal softer GDP growth during the quarter. In 2Q15, economic activities were lacklustre on the back of the slowdown in household spending, weak business sentiments, elevated prices, weaker-than-expected Ringgit currency, and contraction in exports. Loans growth for the household segment grew at a slower pace of 9.0% YoY in May on the back of higher prices and cautious spending. Notably, deposit growth for the banking system moderated to 7.7% YoY in May, from 8.4% YoY in April. Deposit growth rate slowed on the back of the decline in both term and savings deposits. Elsewhere, more loans were delinquent as gross impaired loans registered an uptick of 2.8% MoM in May. All in, slower-than-expected growth in the household segment signals softer GDP growth. Note that the household segment contributed a significant 57.2% to total loans in May. As a percentage of GDP, private consumption expenditure accounted for 53.3% of GDP in 1Q15

Others :

RHB Capital : Steering our credit cost assumption to latest industry indications                                    HOLD

QUICK TAKE

Plantation Sector : Newsflow for week 20 to 24 July         OVERWEIGHT

               

NEWS HIGHLIGHTS

Petronas Chemicals  : JV plants to cost billions

DRB-Hicom : CTRM poised to drive earnings

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