[Latest] How Was Malaysia Doing in 4Q 2018 ???

Today, yes during Valentine's Day, Bank Negara Malaysia (BNM) released its 4Q 2018 report to the general public. Fortunately, the result is above forecasts with the economy expanded at 4.7% in the fourth quarter of 2018 (Q4 2018), after two consecutive quarters of moderation earlier.

Read the Key Highlights here:

• Higher economic growth of 4.7%, higher than consensus forecasts of 4.5%
• Continued expansion across most sectors, with the exception of commodity-related sectors
• Services and manufacturing sectors remained the key drivers of growth
• Malaysia's macroeconomic fundamentals continue to remain strong despite domestic and external headwinds.

For 2018, the value of the gross domestic product (GDP) recorded RM1.23 trillion at constant prices and RM1.43 trillion at current prices.

• Headline inflation declined in the fourth quarter of 2018 as transport inflation turned negative reflecting the fixed domestic RON95 petrol and diesel prices
• The combined outcome of the changes in consumption tax policy continued to exert an overall downward impact to headline inflation
  

• Malaysia’s external debt stood lower at RM924.9 billion, or 64.7% of GDP as at end December 2018 (end-September 2018: RM933.3 billion or 65.3% of GDP).
• The country’s external debt remains manageable, given its currency and maturity profiles, and the presence of large external assets.
• Close to one-third of external debt is denominated in ringgit (31.1%; end-September: 31.3%)

How about this year 2019?
According to BNM, the Malaysian economy is likely to remain on a steady growth path given below factors:

• Global growth reverting to the long-term trajectory
• Resilience of private consumption and continuation of civil engineering projects
• Recovery from supply side shocks
• Commencement of new production facilities (RAPID, E&E, retail outlet expansion)
• Materialisation of approved manufacturing investment

Source: Bank Negara Malaysia

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3 Key Takeaways from Bank Negara Malaysia Annual Report 2017

Against a background of broad-based global recovery and the relatively low volatility in the international financial markets, the Malaysian economy performed strongly in 2017. The Annual Report provides an analysis of the developments in the Malaysian economy and outlines the future challenges.

Key highlights:

In 2017, the Malaysian economy recorded a robust growth of 5.9% (2016: 4.2%), supported by faster expansion in both private and public sector spending. A key highlight of the year was the rebound in gross exports growth as global demand strengthened. This was due mainly to higher demand from major trading partners following the upswing in the global technology cycle, investment expansion in the advanced economies and the turnaround in commodity prices.

Economy to grow between 5.5% - 6.0% in 2018

Headline inflation increased to 3.7% in 2017 (2016: 2.1%). Inflation remained volatile during the year and was primarily driven by higher domestic fuel prices. Higher global commodity prices and disruptions in domestic food supplies also contributed to the higher inflation.

This, however, was mitigated by the stronger ringgit exchange rate since April 2017, which helped contain the rise in production costs for domestic goods. Core inflation was also higher in 2017, averaging at 2.3% for the year (2016: 2.1%). Nevertheless, demand-driven inflationary pressures remained largely stable given the lack of persistent tightness in capital stock and the absence of significant wage pressures.

Headline inflation expected to be between 2.0% - 3.0% in 2018

Malaysia’s external position improved considerably in 2017, benefiting from the favorable global economic landscape and relatively lower volatility in the international financial markets. Malaysia recorded a higher current account surplus, largely due to a higher goods surplus following the strong export performance, which more than offset widening deficits in the services and primary income accounts.

Gross exports rebounded to grow strongly by 18.9% (2016: 1.2%), driven mainly by export volumes, particularly in manufactured exports. Gross imports also registered double-digit growth of 19.9% (2016: 1.9%), mainly reflecting higher imports of intermediate goods, capital goods, and goods for re-exports. The increase in imports was in line with the robust manufacturing exports, more rapid investment in the manufacturing and services sectors, and robust global demand. 

Gross export will continue to record above-average growth in 2018

Source: Bank Negara Malaysia Annual Report 2017