KUALA LUMPUR, Nov 14 — Malaysia’s economy grew 5.6 per cent in the third quarter from a year earlier, as expected, slowing from 6.4 per cent growth in the second quarter, amid concerns over the impact of a fragile global economy on Malaysian exports.
Malaysia’s economic expansion slowed last quarter after exports cooled, an easing that may persist as subsidy cuts weigh on private consumption.
Gross domestic product rose 5.6 per cent in the three months through September from a year earlier, after climbing a revised 6.5 per cent in the second quarter, the central bank said in Kuala Lumpur today.
That matched the median estimate in a Bloomberg News survey of 26 economists.
Demand for Malaysian goods has weakened amid an uneven global recovery, while consumers and companies are grappling with higher costs as the government reduces subsidies. The central bank held interest rates in the two most recent policy meetings after becoming the first in Southeast Asia to raise its benchmark this year, pointing to rising threats to the world economy.
“Some slowdown in sectors like manufacturing, export- related manufacturing” and the softness in commodity prices are causing exports to come off, Suhaimi Ilias, chief economist at Maybank Investment Bank in Kuala Lumpur, said before the report. “We don’t see anything happening on the overnight policy rate until at the earliest probably the last meeting of next year.”
The ringgit fell 0.1 per cent to 3.3438 against the US dollar as of 11:47am local time. It has weakened about 4.9 per cent in the past three months. The FTSE Bursa Malaysia KLCI Index of shares dropped 0.2 per cent today.
Higher Prices
The government raised fuel prices by about 10 per cent in October as part of Prime Minister datuk Seri Najib Razak’s latest efforts to contain fiscal spending and narrow a budget deficit. Some gas tariffs were also increased this month.
Consumer prices are forecast by the government to climb 4 per cent to 5 per cent next year, the fastest since 2008. A goods and services tax of 6 per cent will start in April, an added burden on businesses and households.
Exports climbed 2.8 per cent in the third quarter from a year earlier, after increasing 8.8 per cent in the previous three months. Manufacturing growth eased to 5.3 per cent.
Services rose 6.1 per cent in the three months through September from a year earlier after climbing 6.2 per cent in the second quarter, today’s report showed. Private consumption grew 6.7 per cent in the same period, quickening from a 6.5 per cent pace in the three months through June.
GDP is projected by the government to expand as much as 6 per cent this year and next. The economy grew 6.1 per cent in the first three quarters.
“It looks like the odds of a rate hike is lower now given that growth conditions are slower,” Julia Goh, an economist at CIMB Group Holdings Bhd. in Kuala Lumpur, said before the report. — Bloomberg
