Malaysia’s first-quarter GDP growth seen cooling on weak demand, exports

Boats float in front of the VOPAK oil storage terminal in Johor, Malaysia November 7, 2017 - Reuters

KUALA LUMPUR (Reuters): Malaysia’s economic growth pace likely slowed in the first quarter, due to tepid consumption and softer global demand as a result of the US-China trade war, a Reuters poll showed.

The poll of 13 economists predicted the economy will grow at a median rate of 4.3% in January-March, slower than the 4.7% pace of the fourth quarter.

Individual forecasts ranged from 4.2% to 4.5%.

Exports from Southeast Asia’s third-largest economy contracted in February and March, and will likely face sustained pressure in the coming months as the United States pursues another round of tariff increases on Chinese goods, Capital Economics said in a research note.

“Malaysia is one of the most vulnerable countries to a drop in US demand for Chinese goods, as a large exporter of intermediate goods to China,” Capital Economics said in a note on Friday.

China on Monday announced it would impose higher tariffs on $60 billion of US goods following Washington’s decision last week to hike its own levies on $200 billion in Chinese imports.

Malaysia’s 2018 full-year growth came in at 4.7%, just below the government’s forecast of 4.8% but far short of the 5.9% pace set a year earlier.

The fourth quarter’s better-than-expected 4.7% rate snapped a four-quarter streak of slowing growth, but Bank Negara Malaysia (BNM) has since said it expects expansion to moderate this year.