Malaysia's Q2 GDP growth likely to top year ahead

The Reuters poll found that Malaysia's economy grew at its fastest pace in a year last quarter, thanks to a rebound in private consumption and buoyant exports.

The Aug. 3 -- 9 poll of 18 economists predicted southeast Asia's third-largest economy expanded by 6.7 per cent in the April-June quarter compared with the same period a year earlier.

It would be the fastest growth since the same quarter last year.

The forecasts for gross domestic product growth due to be released on August 12 ranged from 5.2 per cent to 9.2 per cent, higher than the 5.0 per cent increase in the previous quarter.

Vincent Loo of KAF Investment Bank said that private consumption was likely the main growth driver and that a jump of 30 per cent YoY in Q 2 export growth would have contributed to the faster Q 2 GDP print.

In the first quarter, export growth was 22 per cent, said Loo.

We expect GDP growth to accelerate further in Q 3, due to base effects nationwide lockdown in Q 3 2021 before normalising in Q 4 and into the next year due to slowing global trade, rising inflationary pressure and tighter monetary conditions. Malaysia's economic recovery from the Pandemic has been strong since opening its borders in April, but an expected global economic slowdown is likely to have an impact on the economy.

Although export growth performed well, its open economy is exposed to growing global economic headwinds and slowdown due to U.S. Fed tightening and European energy insecurity from the Russia-Ukraine war, even as Chinatries to recover from the Pandemic lockdown - induced weakness, said Chua Han Teng of DBS.

A separate Reuters poll showed that Malaysia's economic growth for this year would be 6.5 per cent higher than Bank Negara Malaysia's BNM forecast of 5.3 per cent -- 6.3 per cent, but then slows to 4.6 per cent in 2023.

Malaysia's central bank was expected to follow its global peers and continue on its hike to tame rising inflation.

In a second straight meeting, BNM raised its benchmark interest rate by 25 basis points to 2.25 per cent last month.