BENGALURU- Malaysia’s economy likely grew at its fastest annual pace in a year last quarter, bolstered by resilient domestic consumption and improving exports, according to a Reuters poll of economists.
The Southeast Asian economy is expected to have expanded by 3.9 percent in January-March from a year earlier, according to the median forecast of 26 economists in a May 8-14 poll, faster than 3.0 percent in the previous quarter.
Forecasts for gross domestic product (GDP) growth ranged from 2.8 percent to 4.3 percent . The data will be released on Friday.
“We think growth will be broad-based – stemming mainly from the robust consumption momentum that we saw from last year, a rise in investment growth from the robust FDI inflows, as well as a turnaround in exports,” wrote Nazmi Idrus, head of economics at CGS-CIMB Securities.
“We are positive on trade. So far we have seen exports gradually leaving the negative year-over-year territory. I think the upcycle in the global electrical and electronics industry is helping to revive export demand.”
Malaysian trade is heavily dependent on China, which reported better-than-expected first-quarter economic growth data, signaling a potential upswing in trade between the two economies.
Exports rose more than expected in January before falling 0.80 percent in February and March year-on-year.
Bank Negara Malaysia (BNM) held the overnight policy rate steady at 3.00 percent in May to support the ringgit, despite a weak currency potentially benefiting an export-oriented economy like Malaysia’s.
“Although a depreciating currency can enhance the competitiveness of the country’s exports, prolonged weakness may lead to higher imported inflation and undermine investor confidence,” wrote Vincent Loo, senior economist, KAF Research.
“BNM’s current monetary policy is expected to stay unchanged, providing continued support for economic growth, while maintaining stable price pressures in the medium-term.”
Malaysia’s growth was expected to average 4.3 percent this year, at the lower end of BNM’s 4-5 percent forecast, a separate Reuters poll in April showed.
