Malaysia’s economy probably grew faster in the fourth quarter (4Q) with exports and private consumption helping to snap four quarters of slowing growth, a Reuters poll showed.
The poll of 14 economists produced a median forecast for annual growth of 4.7% in the October-December period, up from the 4.4% pace set in the 3Q.
Individual forecasts ranged from 4.1% to 5%. The South-East Asia’s third-largest economy, and an exporter of palm oil and liquefied natural gas, expects to be vulnerable to spillover from the US-China trade war, but has so far not seen any major slowdown in its exports.
The economy is still primarily driven by private consumption, but receives an added boost from external demand, HSBC Group said.
“The external sector likely remains robust, with both exports and imports reported to have risen, but exports rise at a faster pace, leading to an overall positive contribution from net exports,” the bank said in a note last Friday.
Exports in December grew 4.8% from a year earlier, the fourth straight month of expansion. Malaysia posted its largest trade surplus ever in October, when exports surged 17.7%.
However, overall growth in the 4Q was expected to have been weighed down by lower consumer and business sentiment compared to the previous quarter, HSBC said.
Julia Goh, a Malaysia-based economist with United Overseas Bank (M) Bhd (UOB), said a lack of clarity from the government on corporate incentives may also have crimped economic expansion in the 4Q as companies halt or slow plans for more investment.
In November, Prime Minister Tun Dr Mahathir Mohamad’s government unveiled an expanded budget for 2019, but set a higher fiscal deficit target as it looked to slash debt of over RM1 trillion blamed on the past administration of Datuk Seri Mohd Najib Razak.
The government said it would cut public spending sharply despite foreseeing the economy growing more slowly than had been expected earlier.
It forecast economic growth of 4.8% in 2018 — a sharp drop from the 5.9% pace a year earlier — with a slight pickup to 4.9% in 2019.
UOB’s Goh said the government has to limit its hand-outs due to its tight fiscal situation, while it delivers on campaign promises such as raising the minimum wage, which translates to higher labour and operational costs for businesses.
“On the positive side, there is (the removal of) the Goods and Services Tax and tax refunds, which is something that corporates and individuals can look forward to in 2019.”