Malaysia: Firm start to 2018 – Standard Chartered

Analysts at Standard Chartered point out that Malaysia reported firm Q1-2018 GDP growth of 5.4% y/y and the q/q seasonally adjusted growth rate was also decent, at 1.4%, faster than 0.9% in Q4-2017 and in line with the 2017 average.

Key Quotes

“We maintain our 2018 growth forecast of 5.3%.”

“We observed a divergence in performance in the Q1-2018 GDP print, with private consumption being the primary growth driver. Net exports recorded a huge positive contribution owing to a sharp decline in imports (as export growth actually eased versus Q1-2017). Meanwhile, private-sector investment and government expenditure were soft, on lower capital spending and reduced expenditure on supplies and services, respectively.”

“The new government announced the effective removal of the Goods and Services Tax (GST) from 1 June 2018. We therefore see downside risk to our 2018 inflation forecast, but hold off on revising our forecasts pending clarity on the re-introduction of the Sales and Services Tax (SST).”