Above expectation – Malaysia’s economy in 4Q17 eased to +5.9% y-o-y after post a sturdy growth of +6.2% in 3Q17. The result is above our in-house expectation and market consensus of +5.7% and +5.8% respectively. The higher than expected performance was aided by Services, Manufacturing and Agriculture sectors for production side while Private final consumption for expenditure side. GDP, after being seasonally adjusted, registering a growth of +0.9% as compared to +1.8% in the preceding quarter. Therefore, as for full year 2017, Malaysian economy grew at faster pace with a GDP growth of + 5.9% (vs 2016: +4.3%); with a total value of RM307.9b at constant prices while RM355.7b at current prices.
Positive growth shown by all sectors except Mining and Quarrying – The Services sector (being the main contributor to GDP, accounting for 54.85% of GDP) posted a strong growth of +6.2% y-o-y (vs 3Q17: 6.6%) , mainly driven by wholesale & retail trade (+6.9%) as well as information & communication (+8.1%) sub-sectors. Both sub-sectors were underpinned by steady growth in wholesale segment (+7.4% vs 3Q17: 6.9%) and higher communication & computer services. Besides, Manufacturing sector grew by +5.4% y-o-y in 4Q17 (vs 3Q17: 7.0%) supported by strong momentum in semiconductor and integrated circuit boards as electrical, electronic & optical product grew by +5.7% in fourth quarter (vs 3Q17:8.7%). Besides, Agriculture sector registered a highest growth since 3Q11 by posting a double-digit growth of +10.7% y-o-y as compared to +4.1% in last quarter. The superb performance by Agriculture sector was spurred by Oil palm (+23% y-o-y) following higher yield of fresh fruit bunches in this quarter. While for Construction sector, it grew by +5.8% y-o-y (vs 3Q17: +6.1%), supported by civil engineering (+14.2%), specialized construction activities (+8.5%) and non-residential buildings (+0.3%). However, Mining and Quarrying sector showed a decline in this quarter by posting -0.5% y-o-y (v.s 3Q17:+3.1%). The performance of this sector was dented by decline in production of natural gas and crude oil.
Steady domestic demand – Private Final Consumption Expenditure, which contributed 52.2% of GDP in this quarter, remained robust by registering a higher growth of +7.0% (v.s 3Q17: +7.2%). This was mainly lifted by consumption of food & non-alcoholic beverages, communication, restaurants & hotel as well as housing & utilities. Besides, Public Final Consumption Expenditure strengthened to +6.9% (v.s 3Q17: +3.9%) thanks to higher spending on supplies and services. Meanwhile, Gross Fixed Capital Formation (Investment) moderated to +4.3% as compared to +6.7% in last quarter. The slower momentum was due to tepid growth in Machinery & Equipment, +3.8% (v.s 3Q17:+11.5%).
Softening in external demand – Exports and imports eased to at +7.1% y-o-y and +7.4% y-o-y respectively in this quarter (v.s 3Q17: Exports: +11.8%, Imports: +13.4%). Both exports and imports performance were affected by moderation in external trade environment and slow imports of goods and services activities. We reckon that export and import growths will soften in 2018 amid high base recorded in 2017. However, we believe overall external trade will maintain its positive growth, albeit at a slower pace, driven by manufacturing sector on the backdrop of strong global trade activities, recovery in global economy and meaningful recovery in commodity prices.
Expecting resilient GDP growth for 2018 despite in a modest mode – We envisage the country’s GDP moderate from +5.9% in 2017 to +5.3% in 2018 amid prevailing domestic and external conditions. We expect Service and Manufacturing from supply side, and Private Final Consumption Expenditure from demand side to remain the key contributors to our nation’s GDP. Overall, we forecast the nation’s GDP to grow steadily at 5.3% for 2018.
Source: JF Apex Securities Research - 15 Feb 2018
Created by kltrader | Aug 28, 2023