Published: Thursday November 15, 2012 MYT 4:00:00 PM

Malaysia’s GDP to grow at slower pace of 4.9% in Q3

By Joseph Chin

KUALA LUMPUR: Moody's Analytics forecasts Malaysia's GDP to have grown at a slower pace of 4.9% in the third quarter ended September from 5.4% a quarter earlier.

It said on Thursday exports had declined due to softer global demand, but this was partly offset by domestic demand, hence for 2012, Malaysia's GDP was expected to expand 4.8% on-year.

“The economy is forecast to expand 4.8% in 2013 driven by investment and improving regional demand,” it said.

In its assessment of Malaysia, it said the export-led economy slowed in the third quarter, weighed down by the Eurozone's fiscal austerity and lacklustre US recovery.

On a year-ago basis, nominal exports contracted 2% in Q3, 2012 after a 4% gain in Q2.

Moody's Analytics said robust domestic demand had partly offset the external weakness.

It pointed out that in the first half of 2012, the major catalysts were the government's drive to improve and develop infrastructure and a steady flow of foreign capital. This has also supported the broader economy, including the labour market, with positive effects on household spending.

“Monthly lending and production data suggest the domestic economy is still expanding. High-frequency indicators suggest Malaysia's GDP expanded 4.9% on-year in Q3, around the long-run trend rate,” it said.

However, it expected the current drivers of growth to continue. It expected the government's plans to develop infrastructure and its recently announced handouts to civil servants and others should buttress the domestic economy.

“At this stage we expect full-year growth in 2012 will print between 4.6% and 5%. Domestic demand is expected to remain robust, while China's recovery is expected to lift regional demand and with it Malaysian exports,” it said.

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