Malaysian third quarter GDP saw a stellar recovery in the September quarter, owing to household consumption and exports. On a quarter-on-quarter basis, the GDP grew 18.2 percent, as compared with market expectations of a growth of 16 percent and second quarter’s print of -16.5 percent. On a year-on-year basis, the GDP growth came in at -2.7 percent, a rebound from previous quarter’s -17.1 percent.
Household consumption grew sequentially by nearly 29 percent translating into a mild annual decline of 2.1 percent year-on-year. The rebound itself was driven by higher spending on essential items. Discretionary spending is proving to be slow to mend. Markedly, government spending rose 6.9 percent year-on-year in spite of the softness in monthly government expenditure data. Net exports were also growth accretive, with exports falling at a softer pace than imports.
On the contrary, investment continues to weigh in on growth. While its pace of decline of 11.6 percent year-on-year was more moderate than in the prior quarter, it still subtracted 2.6 percentage points from overall GDP growth.
From the supply side, manufacturing outperformed other sectors. It continues to benefit from the upturn in the global tech cycle. The performance of other sectors was more mixed. Services sector has greatly bounced back from the lows of second quarter, but tourism dependent industries continued to be strained.
“With this impressive improvement in overall GDP, we will be re-visiting our full year 2020 forecast. At the same time, we are mindful of the lingering challenges. The most important of these is the re-imposition of mobility restrictions in a few regions. As a consequence, real time indicators have flat lined”, added ANZ.