The Department of Statistics will release the GDP figures for the last quarter of 2015 tomorrow.
I fear we will see the ugliest numbers within the past three years, if we are lucky. It will not be a contraction but for a country like Malaysia — a young population which suggests strong potential growth — anything close to 4% YoY is pretty bad. In 1Q13, the GDP grew 4.3% YoY. To find something worse, you will have to go all the way back to 2009 during the last recession.
I think private consumption growth decelerated in the last quarter. In 3Q15, it expanded only 4.1% YoY after increasing 6.4% YoY. If I have to guess, the GST is having a prolonged negative impact on the economy, on top of other things happening. The various layoffs we saw last year added further stress to consumption growth. These people who lost their jobs should begin to cut their spending. I have also heard discouraging stories over the Chinese New Year, suggesting it is not over yet, which made me re-read a joke I wrote three years ago that is no longer funny. I have also noticed many oil and gas professionals are turning to Uber to meet their financial obligations.
At work as well, we maintain various index measuring all kinds of things from sentiment to spending pattern. I cannot share them with you but I can tell you, it ain’t pretty.
But perhaps, the surest indication of a slower economy beyond anecdotes is from the manufacturing side. The GDP does follow industrial growth rather closely. So closely in fact, you could make a decent econometric forecast based on the index. The following chart comparing GDP with industrial growth gives you an idea of what had happened in the quarter.
Another piece of bad news is the government is in love with its deficit target out of fear of credit rating downgrade. I generally supportive of cutting the deficit but this is the wrong time to do it. But, I am just a keyboard warrior.
Exports however might cushion the domestic slowdown. In the fourth quarter, I think, it finally exhibited a J-curve, which essentially describes the idea that exports would slow rise up after a currency depreciation. Indeed, exports to the US have been phenomenal for a number of months now. Overall exports of goods have grown faster in 4Q15 on yearly terms compared to the previous quarter. But it will not be enough to fight off the domestic growth slowdown.
At the end of the day, this keyboard warrior’s model suggests the 4Q15 GDP growth will be around 4.2%-4.4% YoY.
But I could be wrong. Could you do better?
This not-nearly-as-scientific poll will close at noon tomorrow when the official GDP figures are out.
How fast did the Malaysian economy grow in 4Q15 from a year ago?
- 2% or slower (0%, 0 Votes)
- 2.1%-3.0% (0%, 0 Votes)
- 3.1%-3.5% (0%, 0 Votes)
- 3.6%-4.0% (36%, 4 Votes)
- 4.1%-4.5% (36%, 4 Votes)
- 4.6%-5.0% (27%, 3 Votes)
- Faster than 5.0% (0%, 0 Votes)
Total Voters: 11
Oh, this post is dedicated to this man.