Malaysia's GDP Growth To Gain Further Momentum: Capital Economics

Malaysia's economic growth is likely to accelerate in the coming quarters, underpinned by robust global demand, loose monetary policy and a recovery in energy prices, Alex Holmes, an economist at Capital Economics, said Friday.

During the first quarter, the annual GDP growth increased for a third straight quarter to 5.6 percent from 4.5 percent in the previous three months. This indicated a strong growth momentum at the start of the year, the economist said.

The growth in the March quarter was boosted by increased private consumption, government spending and investment.
Export growth also accelerated during the period.

While growth is set to remain strong in the coming quarters, high levels of household debt will constrain the recovery in private consumption growth, the economist noted.

The Malaysian government is targeting a slight narrowing of the fiscal deficit this year, to 3.0 percent of GDP from 3.1 percent last year.

Malaysia's export-dependent economy should benefit from the positive outlook for the global economy, Holmes noted.

"We think growth may now have peaked," the economist said.

"Nevertheless, given the strong Q1 outturn, we are raising our GDP growth forecast for 2017 to 5.5 percent, up from 4.5 percent previously."

by RTT Staff Writer

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