Economic Analysis - Upgrading Growth As Economic Outlook Improves - DEC 2017


BMI View: Malaysia ' s economy grew by 5.8% y-o-y in Q217, bringing H117 growth to 5.7%. Continued strong demand for electronics will bode well for exports while higher oil prices will be supportive of overall growth. In addition, the increase in election-related spending will provide a boost to headline GDP growth, while domestic demand is likely to remain resilient. We are thus upgrading our 2017 and 2018 real GDP growth forecasts to 5.3% and 5.0%, respectively from 4.7% and 4.6% previously.

Malaysia's real GDP expanded by 5.8% y-o-y in Q217, bringing H117 growth to 5.7%. On a q-o-q seasonally adjusted basis, the economy grew by 1.3% in Q217, slowing slightly from the 1.8% q-o-q recorded in the previous quarter. Continued strong demand for electronics suggests that exports will be the main driver of growth over the coming quarters, while higher oil prices will be supportive of overall growth. Domestically, we expect there to be a slight increase in government spending in the run up to the general elections that must be held by August 2018. To date, the ruling Barisan Nasional (BN) coalition has already announced a slew of measures aimed at boosting support and we expect this to continue as elections draw near, providing a boost to headline growth. We are therefore upgrading our 2017 and 2018 real GDP forecasts to 5.3% and 5.0%, respectively from 4.7% and 4.6% previously.

Export Demand To Remain Strong

Source: BMI, Bloomberg

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