Malaysia's Q3 GDP may post 4.8% growth

August IP growth unexpectedly slowed to 3.0% due to weaker-than-expected mining activity, even as exports remained elevated despite soft global demand, the weak MYR and falling business confidence. On a seasonally adjusted m/m basis, industrial production fell 0.9%. 

"Today's print brings the tracking estimate of Q3 GDP to 4.8%. We continue to forecast growth of 5.0% for 2015, with H1 growth already coming in at 5.3%", says Barclays.

Within IP, mining activity softened at the margin, declining 3.4% y/y. Mining performance has been very strong this year (~7.0% growth YTD), and August was a rare soft print in activity.

Manufacturing growth also remains resilient, rising 4.5% y/y, supported by decent momentum in exports. Power production jumped 15.9% y/y, possibly because many more people stayed indoors to avoid the region's haze conditions.

While market conditions in Malaysia have been volatile and the MYR has weakened considerably, growth conditions and real activity continue to show decent momentum.

However, BNM continues to sound cautious on global growth, with governor Zeti citing "more risks of slower Malaysian growth as world weakens" in an interview in Lima, Peru, on the sidelines of the IMF world bank meetings. The central bank to keep rates on hold through 2015 and think it may only look to raise rates by mid-2016, argues Barclays.