M'sia GDP may rise as much as 6 per cent

M'sia GDP may rise as much as 6 per cent

PETALING JAYA - Malaysia's economy is expected to expand by as much as 6 per cent in the first quarter of this year after higher exports and industrial output signalled an acceleration of growth from the fourth quarter of 2013.

The official data will be released today and economists polled by Bloomberg on average estimate the economy would grow by 5.7 per cent in the first quarter.

"We expect GDP (gross domestic product) to grow up to 6 per cent, better than the initial forecast of 5.7 per cent in view of robust export and industrial output growth, as well as low base in the first half of last year, when the economy expanded by just over 4 per cent," said Maybank Investment Bank Bhd chief economist Suhaimi Ilias.

He, however, expects economic growth to ease in the second half of the year as consumer spending, which has been among the linchpins of the economy in recent years, is projected to slow to a growth rate of around 5 per cent, partly caused by the high base effect from the correspondinng period last year.

Malaysian Rating Corp Bhd (MARC) chief economist Nor Zahidi Alias also expects GDP growth to accelerate to about 6 per cent in the first quarter following a rebound in exports.

"Exports recorded a double-digit growth in the first quarter of this year compared with an almost flat growth last year," he said, adding that export growth momentum was projected to continue for the rest of the year and could act as a buffer for any possible uncertainties in the domestic front.

Malaysia's GDP grew 5.1 per cent in the fourth quarter of 2013 versus a year earlier, driven by the manufacturing and services sectors. Together with strong domestic demand, GDP for 2013 was 4.7 per cent compared with 5.6 per cent in 2012.

Zahidi said stronger GDP growth would give a boost to Government revenue.

"Government revenue will likely rebound this year, with its ratio to GDP averaging between 22 per cent and 24 per cent, which is the same level as South Korea's."

"It will likely be more than projected in 2014," he told StarBiz in an email reply.

While the slowdown in China may pose a risk to the country's economic growth, Kenangan Research said the recovery in demand from advanced economies would offset the impact of slower growth in Malaysia's largest trading partner.

"Any impact of slowdown from China would be mitigated by an improvement from the West."

"If China's economy grows by just 7.5 per cent (their official target) or even as low as 7 per cent, it's still at a level that's able to support its economy," Kenanga Research said.

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