Malaysia’s economy expanded at a better-than-expected pace in the third quarter, snapping five straight quarters of contraction, the central bank said yesterday.
Bank Negara said GDP grew 4.3 percent in the third quarter, faster than the 4 percent forecast in a Bloomberg News poll as private domestic consumption offset weak government spending.
However, it warned of further economic headwinds ahead.
“Overall, while domestic conditions remain resilient, uncertainties in the external environment may pose downside risks to Malaysia’s growth prospects,” the central bank said.
Energy-exporting Malaysia has the third-largest economy in Southeast Asia, but it has been grappling with falling crude oil prices and weak overseas demand.
Consumers and firms are now the growth pillars of the economy after a collapse in global crude oil prices hurt exports and curtailed the government’s ability to spend.
Donald Trump’s victory in the US presidential election poses a risk to Asian economies should he follow through with his policy of imposing trade barriers.
“Weak export sales could likely be the main drag,” Singapore-based DBS Group Holdings Ltd senior economist Irvin Seah wrote in a report on Thursday. “Amid the challenging external environment, domestic demand will likely remain the key driver of growth.”
Malaysia’s GDP growth in the second quarter of this year was 4 percent, the slowest since 2009.
The nation has also been rocked by a massive financial scandal centering on allegations that billions of US dollars were stolen from a state investment fund overseen by Malaysian Prime Minister Najib Razak, who denies wrongdoing.
In July, the central bank unexpectedly cut interest rates for the first time in seven years to help spur growth.
In next year’s budget unveiled last month, Najib announced new cash assistance for the poor, public-sector pay rises to help stoke consumption and plans for more infrastructure projects.
The World Bank has forecast Malaysia’s full-year growth would be below 5 percent this year and next year.
Additional reporting by Bloomberg
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