KUALA LUMPUR, May 22 — Research firms have revised upwards their projections of Malaysia’s 2017 overall Gross Domestic Product (GDP) growth following the upbeat first quarter results, which surpassed consensus estimates of 4.8 per cent.

Maybank IB Research upgraded its forecast to 5.1 per cent from 4.4 per cent, AllianceDBS Research (4.8 per cent from 4.4 per cent), RHB Research Institute (4.8 per cent from 4.5 per cent) and Standard Chartered Research (4.6 per cent from 4.1 per cent).

The new projection, according to Maybank IB Research, reflects the upward revisions in the growth of manufacturing to 5.0 per cent, services (5.8 per cent) and agriculture (7.0 per cent) on the supply side, and the growth of consumer spending to 6.4 per cent, public consumption (5.5 per cent), investment (6.7 per cent), exports (7.8 per cent) and imports (9.7 per cent) of goods and services on the demand side.

"The prospect of a better-than-expected pick up in real GDP growth this year, after the slowdown in 2015-2016, adds to the list and a sense of easing macro pains experienced in the past two-three years.

"These include the expected corporate earnings recovery after three years of ‘no growth’ which triggered net foreign buying in the equity market year-to-date, a sustained current account surplus, delivery of fiscal consolidation targets,  stabilisation and strengthening of the ringgit, as well as, the receding ‘foreign holding risk’ in the bond market,” it said in a note today.

AllianceDBS Research said the recovery in domestic demand would continue be the main driver of growth.

"Additionally, the favourable outlook on external trade and private investment performance will likely contribute positively to GDP growth this year,” it added.

Another research house, RHB Research Institute opined that strong growth in external activities appeared to be sustainable, and likely continue spilling over to the domestic sector in the coming quarters.

It said the real GDP growth, however, is expected to moderate in the second quarter and the second half of this year as strong export growth tapers off.

"Still, the stronger-than-expected growth in 1Q17 should provide an uplift for economic growth this year. Hence, we are revising our 2017 real GDP forecast upwards,” it added.

RHB Research believed growth in the next quarters would be supported by a stronger-than-expected recovery in exports that would boost overall economic activity and a pick-up in domestic demand, as higher export growth trickles down to an improvement in consumer spending and private investments, as well as, a modest increase in public spending and investment on improving revenue.

Nevertheless, Standard Chartered Research said the real wage growth, which has contracted by 2.3 per cent annually, coupled with high inflation and household debt level would weigh on private consumption going forward.

"We expect an unfavourable base effect in the second half due to the introduction of consumption-supportive measures in the second half of 2016,” it added. — Bernama