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Economy expected to accelerate in quarter two


PETALING JAYA: Malaysia’s second quarter (Q2) gross domestic product (GDP) growth should be better than the first (Q1), underpinned by several macro key data, according to AmBank Group.


Its chief economist Anthony Dass said the group’s preliminary estimate suggested that GDP for Q2 could expand between 5.5% and 5.7%, versus 5.4% in Q1.


For the full year, GDP growth could remain at 5.5% with the lower end at 5.3%, he added.

“May Leading Index (LI) suggests some signs of softening are evident in Q3 after it fell by 0.7% year-on-year (y-o-y) to 117.8 points.


“Factoring in the key macro data for the first two months of Q2 such as industrial production, manufacturing sales, exports, imports and loans approved, we are optimistic that Q2 GDP should perform better than Q1,’’ Dass noted.


On another note, he said banking group’s projection would be that the US Federal Reserve (Fed)’s policy rate will normalise around 2.75%–3.00% with room for it to reach 3.25%–3.50% by end-2019.


“Under the previous US president, we found several spikes in the GDP. We believe the overall GDP is projected to grow around 2.8% for the full-year of 2018, with the upside around 3.0%.


“Hence, we reiterate our view of two more rate hikes by the Fed in the second half of this year – one in September and the other in December, each by 25 basis points (bps),’’ Dass said.


The US Q2 GDP grew at a faster pace of 4.1% q-o-q from 2.2% q-o-q in Q1. The reading turned out to be the best pace since Q3 2014 of 4.9%.


This brings the the first half GDP to 2.8% y-oy.


Strong consumer and business spending, added with strong exports ahead of retaliatory tariffs from China helped drive GDP, he said.


Personal consumption expenditures rose 4% y-oy while business investment expanded 5.8% y-oy and federal government outlays increased by 2.7% y-o-y.


Exports climbed 5.1% y-o-y.


Read more at https://www.thestar.com.my/business/business-news/2018/07/31/economy-expected-to-accelerate-in-quarter-two/#TSq4wdqOAceLLEUf.99

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