- GDP remains broadly stable in 3Q15. GDP advanced by 4.7% YoY in 3Q15, a slight moderation compared to the preceding quarter (2Q15: +4.9%). Aggregate domestic demand grew by 4.0% in 3Q15, contributing 91.4% to total GDP (2Q15: +4.6%). On the supply side, manufacturing (+4.8% YoY) and construction (+9.9%) activities were supportive of growth in 3Q15.

- Healthier trade balance. Net exports grew by 3.3% YoY (or +RM753mil YoY). In terms of contribution to GDP, net exports accounted for 8.7% of real GDP. Trade balance registered a surplus of RM23.4bil in 3Q15, higher than RM21.2bil in 2Q15. International trades could be supportive of growth, driven by the improvement in global demand and stronger-thanexpected growth on the global front.

- Total investment gathered traction. Total investments grew at a healthier pace of 4.2% in 3Q15 (vs. +0.5% in 2Q15), due to the lower base. The better growth in investment was stimulated by the performance of the construction sector. Furthermore, Machinery & Equipment turned positive in 3Q15. Private sector investment rose to 5.5% and led the momentum of investment growth during the quarter (vs. +3.9% in 2Q15). Moreover, the recovery in Public sector investment to +1.8% has contributed to growth (vs. -8.0% in 2Q15).

- Services sector moderated further to 4.4%. On the supply side, the services sector moderated further to 4.4% (2Q15: +5.0%). The slowdown was due to Finance and Insurance (-3.1%); Accommodation and Restaurant (+3.3%); Food and Beverage (+6.6%); and Utilities (+3.1%). Other than that, the Mining and Quarrying sector eased to 5.3% vs. 6.0%. The moderation in this sector was largely due to the lower production of crude oil despite a rebound in production of natural gas and condensate.

- Private consumption moderates to +6.3% as at YTD 3Q15. Private consumption expenditure had slowed as at YTD 3Q15, compared to +6.8% YoY registered in the corresponding period last year. Nonetheless, year-end and festive holidays are likely to augur well for consumer demand during 4Q15. Going forward, healthy loans growth and M3 suggest continued economic expansion. Nonetheless, high levels of household indebtedness and the recent rise in impairments are key challenges for the domestic economy.

Source: AmeSecurities Research - 16 Nov 2015