Malaysian economic growth accelerates above expectations in Q3

The Malaysian economy expanded above expectations in the September quarter. The GDP grew 4.3 percent year-on-year and expanded 1.5 percent in sequential terms, according to Department of Statistics Malaysia. The growth was driven by acceleration in private consumption growth, which helped offset subdued government spending.

Services sector bolstered further in the third quarter and continued to be the main driver on the production side. In the meantime, momentum in manufacturing and construction sectors has also stimulated the overall economic performance.

On the expenditure front, the Malaysian economy was mainly driven by private final consumption expenditure and gross fixed capital formation while the acceleration in net exports has strengthened the economic growth in the third quarter.

Services sector grew 6.1 percent in the quarter, whereas manufacturing sector saw a growth of 4.2 percent. The manufacturing growth was backed by growth in Electrical, Electronic & Optical products and Petroleum, Chemical, Rubber & Plastic products. Meanwhile, construction sector was up 7.9 percent in the third quarter, as compared with the 8.8 percent in the previous quarter. Civil engineering continued to be strong, recorded a growth of 16.7 percent. Moreover, residential buildings grew further to 13 percent, stimulated by properties development.

Private final consumption expenditure was up 6.4 percent in the September quarter, mainly driven by increased consumption of food & beverages, housing & utilities and transportation. Meanwhile, gross fixed capital formation decelerated to 2 percent because of easing in machinery and equipment and the decline in other assets. However, structure continued to be strong by recording 5 percent in the third quarter.

Public sector fell 3.8 percent that has influenced towards the modest growth of GFCF. In the meantime, private sector registered an expansion of 4.7 percent. Exports fell 1.3 percent in the September quarter, reflected by the decline in exports of goods and services. Moreover, imports recorded a negative growth of 2.3 percent because of contraction in imports of goods and services.