Posted on 15 Aug 2012
Domestic demand is likely to prop up the Malaysian economy in the second quarter said economists.
Growth is probably a tad slower than the 4.7 per cent in the first quarter as a Business Times poll expects the second quarter to register a 4.62 per cent average growth in activities between April and June this year.
Bank Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz will release the data this afternoon.
DBS Bank economist Irvin Seah described the Malaysian economic conditions as "sanguine".
"Despite the external headwinds, the saving grace is that domestic demand is holding up," he noted.
Private consumption growth is likely to inch up while a buoyant domestic labour market has improved sentiment, thereby encouraging consumers to loosen their purse strings.
"Although private investment growth may slow to about 12 per cent in the second quarter, from 16.2 per cent previously, it is still fairly healthy growth considering the global uncertainties."
A healthy pipeline of government developmental projects, liberalisation in the services sector as well as public-private partnership initiatives are gradually having the intended effect of stimulating domestic investment.
Seah pointed out the downside risks on the external front, which have led to wavering exports and industrial production growth data.
Net exports will remain a drag on headline GDP growth, he said.
Purchasing Managers' Index (PMI) levels of key export markets have also declined, reflecting waning demand.
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OCBC Bank economist Gundy Cahyadi also expects growth in the second quarter to "stay decent", with risks to the upside.
"We have been encouraged by the fact that private consumption growth has remained strong, and we estimate it to have stayed above seven per cent year-on-year in the first half of the year."
He also expects investment growth to reach a record high and remain in the double digit for the whole first half of the year.
Citi says the second quarter's growth will hinge on domestic demand and services, including the lift from pre-election fiscal transfers to households.
"Based on available data for a slew of indicators so far for the second quarter, domestic demand and services appear to be holding up, with a pick up in car sales and stabilising loan growth.
