May 13, 2016
Malaysia’s economy contracts–Bad News
Malaysia’s economy grew at a slower pace of 4.2% in the first quarter of 2016, due to slower growth in the manufacturing and services sectors, but the overall growth was still above economists’ forecast of a subdued 4% growth.
The Statistics Department said on Friday the growth of 4.2% was slower when compared with the 5.7% growth a year ago. It was also slower than the 4.5% expansion in the fourth quarter ended Decembe 31, 2015.
“On a quarter-on-quarter seasonally adjusted, the GDP for first quarter of 2016 grew 1.0%,” it said. In the Q1, 2016, all sectors on the production side posted a positive growth except for agriculture. The continuous expansion in the dervices, manufacturing and construction has led the growth and remained as the main catalyst.
2016 is going to be a difficult year–Get Real
In a separate statement, Bank Negara Malaysia (BNM) said the services sector grew 5.1% in Q1, 2016 from 6.4% a year ago, manufacturing expanded 4.5% from 5.6% a year ago also. As for mining, it shrunk to grow at 0.3% only from 9&.Construction expanded at a slower pace of 7.9% from 9.6% while agriculture’s contribution was -3.8% from -4.1% a year ago. The Statistics Department said on the expenditure side, the economy was spearheaded by private final consumption expenditure and government final consumption expenditure.
“The expansion in both consumptions has offset the sluggish performance in external demand,” the department said. Malaysia’s value of GDP in current terms for Q1, 2016 amounted to RM291bil.
Q1 2016 GDP versus Q4 2015
The services sector expanded at 5.1% (Q4, 2015: 5.0%) supported by the wholesale & retail trade (5.2%) and information & communication (8.5%).
The manufacturing sector grew 4.5% (Q4, 2015: 5.0%) supported by the electrical, electronic & optical products (5.7%), mainly in semiconductors, computers and peripheral equipment.
The department said this sector performance’s was further supported by petroleum, chemical, rubber & plastic products that grew 2.7% (Q4, 2015: 1.4%) following a turnaround in refined petroleum products and expansion in chemical and plastic products.
Construction sector rose at a faster rate of 7.9% (Q4, 2015: 7.4%). Civil Engineering sustained its double-digit momentum bgrowth of 17.5% though slower from the preceeding quarter (Q4 2015: 20.4%) and continued to support the construction sector.
In terms of expenditure, the department said private final consumption expenditure rose to 5.3% (Q4, 2015: 4.9%) underpinned by consumption of food & beverages, housing & utilities, communication and transportation.
But gross fixed capital formation (GFCF) eased to 0.1% (Q4 2015: 2.7%) due to the deceleration in machinery & equipment (-7.1%) as well as other asset (-3.3%). While the public sector (share: 30.1%) contracted 4.5% which has influenced towards the moderation of GFCF in this quarter, the private sector posted a growth of 2.2% (Q4 2015: 4.9%).