Malaysian economic growth slowed in Q4

Malaysia’s economy grew more slowly in the last quarter of 2017 than the blistering pace set in July-September, a Reuters poll showed, as exports increased at a slower rate.

The median forecast in the poll of 12 economists was for annual growth of 5.7% in October-December, compared with the previous period’s 6.2% – the fastest rate since the second quarter of 2014.

Forecasts for the fourth quarter ranged from 5.2% to 6.1%.

“The best is behind us,” ING said in a note today about Malaysia’s growth pace, noting that a high base effect has been impacting growth rates in several Asian economies.

Whatever Malaysia’s fourth quarter number, 2017 have brought Malaysia its fastest full-year growth since 2014’s 6%.

Growth in each of 2017’s first three quarters topped 5.5%.

Brian Tan, a Singapore-based economist with Nomura, said the fourth quarter brought a “slowdown in exports which looked quite sharp, but we suspect it was due to the ringgit appreciation during the period”.

In October-December, exports rose 12.4% from a year earlier, down from increases of more than 20% in each of the first three quarters. The peak increase, in July-September, was 22.1%.

Malaysia reports its trade figures in ringgit.

During 2017, the currency strengthened more than 10% against the dollar.

Industrial production rose 2.9% annually in December, down from 5% a month earlier.

Growth in Southeast Asia’s third-largest economy beat expectations in the third quarter, helped by private sector spending.

In October, the government revised up its 2017 full-year growth projection to 5.2-5.7%, up from 4.3% to 4.8%.

Malaysia’s economy grew 4.2% in 2016.

Robust private consumption is expected to have propped up fourth quarter growth, with higher motor vehicle and retail sales and strong consumer sentiment, HSBC said in a note.

The volume index of wholesale and retail trade rose 6.8% in the fourth quarter, according to data released last week by Malaysia’s statistics department.

Strong growth figures over the past three quarters and rising inflation rates prompted Bank Negara Malaysia in January to raise its key interest rate by 25 basis points to 3.25%. It was the first hike in three and a half years.

ING, which forecasts 5.5% annual growth for 2017’s fourth quarter, has pencilled in one more 25 basis point rate hike, for the third quarter of this year.