Malaysia’s economic growth quickened in the second quarter as strong domestic demand and a rebound in commodity prices helped it weather a regional slowdown.
Gross domestic product expanded 4.9% in the second quarter from a year ago, up from 4.5% in the previous three months, according to figures from the central bank.
That was the strongest expansion since early 2018 and beat economists’ median estimate of 4.7%. Bank Negara Malaysia governor Nor Shamsiah Mohd Yunus said the central bank expects full-year GDP growth of 4.3%-4.8%, affirming the previous estimate.
Malaysia’s strong showing bucks the trend across the region, where the US-China trade war has taken a toll on trade-reliant economies.
Earlier this week neighbouring Singapore cut its full-year growth forecast to almost zero, and Thailand is expected to roll out a stimulus package later Friday.
Goldman Sachs Group Inc analysts on Thursday downgraded their forecasts for Asia’s four “Tiger” economies amid growing trade tensions.
In addition to commodities strength, Malaysia’s manufacturing has also proven resilient, said Brian Tan, a regional economist at Barclays Bank Plc in Singapore.
The question is how long Malaysia can skirt the headwinds.
“Our base scenario is that this is likely the peak for growth this year and we’ll see a slowdown in the second half,” Tan said. “Headwinds from the trade war will grow ever harder, and on an aggregate level it won’t benefit anyone, not even Malaysia.”
Other key points from Friday’s data include: The economy grew 1% on a seasonally adjusted quarterly basis, slightly above the 0.9% estimate.
All sectors expanded in the quarter but private consumption “remained as the main anchor to the economy,” growing 7.8%, chief statistician Mohd Uzir Mahidin said in a release.
Net exports grew 22.9%, services gained 6.1% and manufacturing grew 4.3%. The current-account surplus stood at 14.3bn ringgit in the second quarter, down slightly from 16.4bn ringgit a quarter earlier but far above the 6.8bn ringgit estimate.
The mining sector expanded 2.9% on-year after shrinking in at least four previous quarters.
Alex Holmes, an economist at Capital Economics, wrote in a research note that the economy would still struggle to pass the low end of the central bank’s target range, predicting it would come in at 4.2%. While consumer spending has surged since the government scrapped a goods and services tax last June, that boost will fade from the statistical base going forward.
“We doubt this is the start of a sustained rebound,” Holmes said. “We are forecasting a renewed slowdown in the second half of this year, driven by weaker consumer spending and a challenging external environment.”