It is that time again. Malaysia’s Department of Statistics will release the second quarter GDP figures on August 21. Growth in the first quarter was 4.1% YoY no thanks to eroded trade surplus. Domestic demand however held up well and prevented the growth figure from being worse.
The situation on the trade surplus front has worsened tremendously over the second quarter. In fact, some private economists are fretting over the possibility of Malaysia experiencing its first trade deficit in a long time as exports have been doing really bad.
I think exports will improve in the second half of the year. Imports of intermediate goods have grown faster in June while imports of capital goods contracted less badly. I think these figures say something about future exports since Malaysia re-exports a lot of its imports.
In any case, there are some indications that domestic demand growth finally slowed. I have some expectations that bad news on the external front will affect domestic demand. It has not happened so far but we will see soon how domestic demand grew in the second quarter.
The upside is that government spending could prove to be an important driver of growth in this quarter, mostly because it was an election quarter. For the same reason, investment might grow slower.
There is also base effect to worry since in the 2012 second quarter, growth was 5.6% YoY. While it is a mathematical artefact, it does highlight how hard it is for the GDP to grow faster than it did previously, especially in this kind of environment. This is a case for somebody to develop seasonally adjusted GDP, but that is another story for the wonks.
Ultimately, I expect growth to be about the same as last quarter, if not worse. I will be surprised if growth is anything greater than 4.5% YoY. What about you?
How fast do you think did the Malaysian economy grow in 2Q2013 from a year ago?
- Above 5.0% (6%, 1 Votes)
- 4.5% to 5.0% (18%, 3 Votes)
- 4.0% to 4.4% (35%, 6 Votes)
- 3.5% to 3.9% (18%, 3 Votes)
- Below 3.5% (23%, 4 Votes)
Total Voters: 17