I have not been this optimistic in a long time. I was right for being bearish for 1Q2013 and 2Q2013. I have also mentioned that 2Q growth would have been much worse if it was not for government spending. Even for the 4Q2012 when actual growth beat all estimates, I was not too impressed. Only the politicians were crowing about it.
All that was caused by weak trade.
I think I will be right to smile a little this time around.
Export growth recovered in the third quarter after months dragging the economy down. The trend had been so bad that some people worried Malaysia might experience current account deficit for the first time in ages. But the recovery in export growth, I think, has pushed the concern behind, especially with the decision by the US Federal Reserve to prolong its monetary stimulus. Having Janet Yallen as the chairwoman also helps, I suppose.
The bad news is that some revisions might be in order for last year’s GDP growth. I have noticed the authority revised last year’s trade numbers down by about 1o basis points in its recent release. We will see how they revised last year’s growth. The GDP in 3Q2012 grew 5.3% from the same quarter the year before. But that is the past. Nobody really quite cares for the past.
I am unsure how government spending changed during the quarter but I have imputed a very low growth in my projection. It is the post-election quarter anyway. There was less temptation to spend money in a big way. Furthermore, there was this sudden panic about government finance because of what Fitch Ratings did last quarter.
Private consumption might have grown slower as well, by a little tiny weeny bit because of the gasoline and diesel subsidy cut, but I think it was not too bad as to negate good news from the improved trade figures during the quarter. In any case, private consumption growth should be around 7.0% still, and that is healthy by any mean.
Investment in terms of gross fixed capital formation might have improved as well because there was no more election. The greater clarity in terms of political outlook should increase confidence.
Because of this, I am expecting growth for the third quarter to be faster than 5.0% year-on-year. I would like to be crazy and say it would be closer to 6.0% year-on-year, but that would be me being too excited.
The official GDP estimate will be released by the Department of Statistics on Friday, November 15 2013. To journalists, note that it is the Department of Statistics, not the Bank Negara Malaysia.
How fast do you think did the Malaysian economy grow in 3Q2013 from a year ago?
- 6.0% or faster (7%, 1 Votes)
- 5.5%-5.9% (7%, 1 Votes)
- 5.0%-5.4% (43%, 6 Votes)
- 4.5%-4.9% (14%, 2 Votes)
- 4.0%-4.4% (14%, 2 Votes)
- Slower than 4.0% (14%, 2 Votes)
Total Voters: 14