Economy Picks Up Momentum in 4Q

Economic Research	17 February 2017
Malaysia
Economic Update
Economy Picks Up Momentum in 4Q Malaysia’s real GDP growth continued to pick up in 4Q16 with a growth of 4.5% YoY, from +4.3% in 3Q, on the back of stronger investment activities, a recovery in exports and higher inventory. For the whole year, real GDP, however, slowed to 4.2% in 2016, from +5% in the preceding year, amid a slowdown in domestic demand. Going forward, we revise our 2017 real GDP forecast upwards to a growth of 4.5% (2016: 4.2%) from our previous estimate of 4%, on account of:     i.   A stronger-than-expected recovery in exports.    ii.   A sustained increase in domestic demand, on the back of resilient consumer spending;   iii.   A modest rise in public spending and private investment; Domestic demand moderated during the quarter, dragged by slower growth in private consumption, while public expenditure fell into a contraction in 4Q. On the external front, exports and imports gained pace in 4Q, however, net exports slowed. On the supply side, growth was supported by a pickup in manufacturing and mining output, while agricultural activities fell by a smaller margin during the quarter. Economist:  Vincent Loo Yeong Hong  | +603 9280 2172 Economist:  Aris Nazman Maslan  | +603 9280 2184