- The Malaysian economy registered a moderated growth of 5.6% in 3Q14 (2Q14: +6.5%), driven by slower domestic demand and softer net trades during the quarter. Domestic demand grew at a slower pace of 4.9% in 3Q14 (2Q14: +5.8%) owing to the moderated growth in investment.

- Trade surplus had also slowed to RM14.8bil in 3Q14, compared to RM18.2bil in 2Q14. Net exports accounted for 7.0% of real GDP (2Q14: 8.8%). As compared to 3Q13, net trades had advanced at a slower pace of 11.4% (vs. 91.0% YoY in 2Q14).

- Meanwhile, private consumption increased by 6.7% (2Q14: +6.5%). Public consumption had also advanced by 5.3% (2Q14: -0.5%). Despite that, overall domestic growth slowed during the quarter owing to the slowdown in investment spending.

- Total investment had advanced by 1.1% YoY in 3Q14 from 7.2% in 2Q14, as private investment registered a slower growth while public investment contracted further during the quarter. Private sector investment grew by 6.8% vs. 12.1% in 2Q14. On the other hand, public sector investment remained subdued as it contracted by 8.9% (2Q14: -3.3%).

- On the supply side, all segments registered a moderated growth in 3Q14 compared to 2Q14. The services sector recorded a growth of 6.1% (2Q14: +6.2%). Services in 3Q14 were stimulated by Wholesale & Retail Trade, Communication, and Business Services. Wholesale & Retail Trade grew at 8.2% supported mainly by Retail (9.4%) and Wholesale (7.9%).

- The construction sector registered a growth of 9.6% (2Q14: +9.9%) and was largely contributed by residential. Residential had advanced by 18.6%, which was the sixth consecutive quarter of registering double-digit growth rates (2Q14: +15.5%). Nevertheless, Non-Residential increased by 7.9%, down from +11.7% in 2Q14.

- On a YTD 3Q14 basis, GDP grew by 6.1% YoY driven mostly by improvement in net trades (YTD 3Q13: +4.6%). Trade surplus advanced by a healthy 32.2% YoY, compared to -14.8% as at YTD 3Q13. Nonetheless, domestic demand had moderated to 6.0%, compared to 7.7% during the corresponding period in 2013. As at YTD, public and private consumption as well as overall investment spending had registered slower growth rates.

- We are maintaining our full-year GDP projection at 5.7% for 2014. For 4Q14, the economy is expected to register a growth of between 5.0%-5.5%. Meanwhile, we anticipate a slower growth of 5.5% for 2015, due to higher domestic cost pressure.

Source: AmeSecurities