Sunday Breakfast:Economy in Malaysia- Better than Expected 2Q15 GDP Growth; Hoping for Waning GST Impact in 2H15

Malaysian Economy: Better than Expected 2Q15 GDP Growth; Hoping for Waning GST Impact in 2H15 The Malaysian economy grew 4.9% YoY in 2Q15, slower than a resilient 5.6% YoY growth posted in 1Q15 following the GST impact, weak commodity prices and challenging external demand. The moderate growth was slightly below our forecast of 5.0% YoY, but beat market forecast of 4.5%, as per Bloomberg survey.

On the supply side, the major economic sectors registered more moderate growth during the quarter with exception of the agriculture sector. The moderate GDP growth is also in tandem with most of ASEAN economies, including Singapore (1.8% YoY) and Indonesia (4.7% YoY), and that of South Korea (2.2% YoY). By expenditure, the private sector remained as the key driver of growth during the quarter.


Private consumption posted a moderate growth of 6.4% YoY as compared to 8.8% YoY recorded in 1Q15 as households adjusted to the implementation of the GST. The moderate consumption growth is expected to continue going forward as indicated by eroding confidence level. Meanwhile, private investment grew moderately by 3.9% YoY in the second quarter after posting a double digit growth expansion in the past two quarters due to a decline in spending on machinery and equipment, especially in the transportation segment, and slower investment in dwelling services.

(Source: web, TA Securities)