The GDP growth number for Malaysia shown on the Bloomberg machine surprised me. I had expected somewhere between 4.0% and 5.0%.
Trade numbers had been very good for the fast few months but I did not expect it to push the GDP growth figure close to 6%. In fact, I watched in awe the growth of the trade numbers given the current confusing state of the world’s economy.
For the GDP figures themselves, the year-on-year growth for the third quarter was 5.8%. The average growth expected by economists listed on Bloomberg was 4.8%. This number had progressively grown over the past months from a number close to 4.0% to what it is now.
Looking at the numbers sweepingly and superficially, government spending grew the largest percentage wise. It grew close to 22%. In terms of absolute value, consumption grew the largest and indeed, it was the main contributor to most of the GDP growth.
I am tempted to say the consumption growth was related to government spending (since the separation between government and the private sector is not so clear cut) but without the energy to mine for that, I will refrain from making more courageous statement.
But what exactly is the driver behind the consumption? In my head, I can only think of government. If I want to know more, I clearly need to dig deeper into the numbers.
Was the growth due to base effect? I do not believe so. Base effect is not a convincing case in post-recovery period. Year 2010 had been a year of normalization and year 2011 grew from a somewhat normalized base. So, I am discounting base effect from explaining the unexpected high growth rate.
3 replies on “[2461] The unexpected 5.8% growth”
Hafiz, you’re looking at the wrong base. The y-o-y numbers look alright, but the quarter on quarter for 3Q last year was awful. Seasonally adjusted, it comes out as -2%.
I checked the 3Q2010 numbers before I wrote this. It grew by 5%. In 3Q2009, it fell by 1%. So, I’m not so sure about base effect (if there is, should be small because I’d think last year sort of ate up the base effect).
I honestly don’t know why the forecasts have been so pessimistic. The IPI numbers have been more than strong enough to justify growth over 5%.
Did you note the revisions? 1Q and 2Q were both revised upwards by about 0.3%.
Also, there is a base effect involved, though its mild. The economy didn’t grow in 3Q 2010 – back then was when the Euro debt crisis started coming up, and US nearly fell back into recession.