The Malaysian economy remains surprisingly resilient. In 3Q2012, its GDP growth moderated to a still commendable 5.2 per cent year-on-year from a revised 5.6 per cent in the second quarter. The growth was driven by strong domestic demand, with impressive albeit slightly slower year-on-year growth in private consumption and private and public investment outlays. Net exports had meanwhile contracted further due to the deterioration in external demand for manufactured goods and commodities.
The services sector expanded at a higher pace of 7.0 per cent yoy in the third quarter compared to 6.6 per cent in the previous quarter. The manufacturing sector is obviously feeling increasingly the heat of negative developments overseas as its third quarter pace of growth moderated somewhat significantly to 3.3 per cent yoy compared to the second quarter's 5.6 per cent. The construction sector, which is benefitting from the on-going implementation of infrastructure projects, expanded a still staggering 18.3 per cent yoy (2Q2012: 22.2% yoy). In terms of percentage point contribution towards real GDP growth, services contributed 3.8, manufacturing contributed 0.8, while construction contributed 0.6.
Consumer confidence is still holding up and is expected to remain largely intact going forward, as indicated by the results of MIER's Consumer Sentiments Survey. The Consumer Sentiments Index (CSI) ended the fourth quarter marginally higher at 118.7 points, compared to 118.3 points in the previous quarter. Of the three components that make up the CSI, Current Financial Position gained 1.5 points qoq while Expected Financial Position was flat qoq. Expected Availability of Jobs was the only component that registered a decline (-0.9 points). All three components remain above the neutral 100-point level.
Business conditions in the manufacturing sector, however, have deteriorated somewhat and could deteriorate further, according to the results of the fourth quarter MIER Business Conditions Survey. MIER's Business Conditions Index, which had broken through its 100-point growth-neutral threshold level in the third quarter to settle lower at 96.0 points, fell further in the fourth quarter to register 94.1 points. Both the expected local sales and expected export sales sub-indices declined slightly in the fourth quarter.
Likewise, the half-yearly FMM-MIER Business Conditions Index settled lower at 88.9 points in the second half compared to 96.8 points previously. The FMM-MIER BCI's forward-looking expected business conditions index also settled lower at 101.1 points (1H2012: 120.2 points), an indication that manufacturers have become less confident in their outlook.
Of the four MIER's sectoral indices, only the Residential Property Index (RPI) came in higher at 124.8 points in the fourth quarter (3Q2012: 113.6 points), while the Tourism Market Index (TMI) was largely unchanged at 129.8 points (3Q2012: 129.9 points). The two remaining sectoral indices, the Automotive Industry Index (AII) and the Retail Trade Index (RTI), came in significantly lower at 105.4 points (3Q2012: 160.0) and 94.8 points (3Q2012: 130.2) respectively. The RTI is the only sectoral index to have settled lower at below the 100-point neutral level.
On account of the results of MIER's fourth quarter surveys, we are keeping to our full-year 2012 growth estimate at 5.1 per cent in this economic update. Going forward, we expect domestic demand to remain resilient and to continue picking up the slack of weak external demand. We are keeping to our 2013 GDP growth forecast 5.6 per cent for the time being. As for Malaysia's real GDP growth in 2014, we expect it to register within the 5.0 and 6.0 per cent range
Inflationary pressures meanwhile remain benign in Malaysia. For the January - November 2012, the CPI increased 1.7 per cent when compared to the same period last year. We are maintaining our inflation rate forecast for full-year 2012 and 2013 at 1.7 per cent and 2.5 per cent respectively and the unemployment rate at the 3.0 per cent for both years. For 2014, we expect inflation and unemployment to register 2.5 per cent and 3.0 per cent respectively.
Posted by suzy at 09:54 AM