RAM Ratings Expects Malaysia's 1Q 2017 GDP To Improve Q-O-Q On Export Upside

KUALA LUMPUR, May 16 (Bernama) -- RAM Rating Services Bhd has forecast Malaysia's Gross Domestic Product (GDP) to increase to 4.8 per cent, in the first quarter of 2017, from 4.5 per cent recorded in the fourth quarter of last year. The robust growth was mainly premised on the sustained upward momentum in external demand, which had provided the main boost to growth, amid resilient domestic demand, said the rating agency in a statement Monday. “The improvement in exports is attributable to both a broad-based increase in demand across regions, as well as, significant upside from the demand for investment-type goods, mainly due to the stronger growth of industrialised economies,” it said. Export-oriented industries are also exhibiting more favourable output growth trends, as opposed to the more volatile and lower growth patterns displayed by their domestic-oriented counterparts. More specifically, consumer-related output growth has been lagging behind the recovery momentum of the other domestic-led sectors. “Although there is a marked improvement in labour market conditions, retail sales growth is still heavily reliant on non-durables or necessities-type consumption, which has still not reverted to the growth rates of the pre-Goods and Services Tax period,” said RAM Ratings economist Kristina Fong. Meanwhile, private investment growth would remain supported by the continuation of infrastructure projects, although some upside may also stem from the return of some foreign investment, which has traditionally led the trade cycle. “As such, this will be a welcome spillover from the continued strengthening of our export growth. On the whole, our full-year GDP growth forecast remains at 4.5 per cent,” added Fong. -- BERNAMA