By Pranoy Krishna
BENGALURU (Reuters) – Malaysia’s economic growth likely slowed but only modestly in the third quarter compared to a year earlier as solid private consumption and construction activity cushioned the impact of declining mining output, a Reuters poll of economists found.
The median prediction of 25 economists in the Nov. 6-12 poll showed the Southeast Asian economy grew 5.3% year-on-year in the July-September period, matching the advance estimate but down from 5.9% in the previous quarter.
Growth was largely driven by a robust expansion in the manufacturing, construction, and agriculture sectors.
“Malaysia will likely show resilient economic growth in Q3. The services sector likely experienced a robust, broad-based expansion, although at a slightly slower pace than in Q2. The manufacturing sector was bolstered by the electronics segment, benefitting from an ongoing global tech upcycle,” said Taimur Baig, chief economist at DBS Bank.
“The main drag to overall real GDP growth in Q3 2024 was from the contraction in the mining sector. The positive growth drivers are likely to sustain into 2025, and a favourable base effect in Q4 2024 should see real GDP growth recover to 5.3% for full-year 2024 from 3.6% in 2023.”
A separate Reuters poll published last month predicted Malaysia’s growth to average 4.7% next year, within Bank Negara Malaysia’s (BNM) 4.5-5.5% forecast.
However, a slowdown in global demand, especially from China – the country’s major trading partner – saw Malaysian exports contract in September, and could weigh on growth prospects.
U.S. President-elect Donald Trump’s plans to impose tariffs on imports from every country is also expected to slow the country’s exports.
“There are some key headwinds over the horizon. The most prominent risk being the potential for a blanket U.S. import tariff on the rest of the world. If implemented, it will substantially dampen global trade activity,” said Woon Khai Jhek, senior economist at RAM Ratings.