News Room - Steel Industry

Posted on 25 Nov 2009

Positive GDP seen for Q4 (Malaysia)

Malaysia’s economy should show positive year-on-year growth in the fourth-quarter following two consecutive quarters of quarter-on-quarter growth as measures undertaken by the Government to boost domestic demand continue to take effect.

 

Collectively, a total of RM67bil in spending, tax cuts and other measures were announced last November and this March by the Government as exports collapsed in the wake of the global economic recession.

 

Economists expect gross domestic product (GDP) to turn positive in the final quarter of the year even as exports continue to feel the effects of sluggish demand mainly from the US, Japan and the European Union.

 

Exports for September showed a drop of 1.1% to RM47.2bil from a month earlier while on a year-on-year basis, it contracted by 24.2%.

 

GDP, according to Government statistics, contracted by 1.2% in the third quarter and 3.9% in the second quarter on a year-on-year basis while on a quarter-on-quarter basis, the economy saw growth in the second quarter of 4.8% and 5.7% in the third quarter.

 

Maybank Investment Bank Bhd chief economist Suhaimi Ilias told StarBiz leading indicators such as the purchasing managers’ indices (PMIs) of the larger economies had shown sequential growth since August and recent data showed growth trends would continue.

“Even if growth moderates this quarter compared with the third quarter, we expect there to be a 2.2% growth compared with a year ago based on the positive trends from around the world,” he said.

 

The euro-zone’s PMI for manufacturing and services rose to 53.7 in November from 53 in October according to data released by Markit Economics yesterday. Any reading above 50 is considered an expansion. This was the 16-member euro-zone’s fourth month of expansion.

 

The Institute for Supply Management’s US manufacturing index expanded to 55.7 in October, the third consecutive month of expansion while China’s PMI for manufacturing expanded to 55.4 last month according to HSBC Holdings plc.

 

TA Securities Holdings Bhd economist Patricia Oh said of immediate concern for the economy was for domestic demand to be sustainable.

 

“Any drop in growth will not come due to lower exports as the trade balance is still in surplus, it may come from private consumption as prior to the economic recession, there was an 8% to 10% growth,” she added.

 

Private consumption grew 1.5% in the third quarter from 0.5% in the second quarter while it contracted 0.7% in the first quarter.

 

Oh said the services and construction sectors would support growth in GDP for the final quarter.