Improvements expected in Q4 2018, says economist

External demand has reportedly been affected by low prices and demand for oil and gas, which could influence growth in the fourth quarter. (Bernama pic)

PETALING JAYA: Malaysia’s gross domestic product (GDP) in the fourth quarter of 2018 is expected to have grown higher than the 4.4% registered during the third quarter, driven by domestic private consumption, says economist Yeah Kim Leng.

Yeah, a professor at Sunway University, told FMT that GDP for the full year of 2018 may be close to 5%.

Retail sales are usually stronger at year-end due to festivities and promotions.

Malaysia recorded GDP of 5.9% in 2017. Bank Negara Malaysia will announce the fourth quarter GDP tomorrow.

“Our fundamentals such as consumption, investment and exports, are still intact,” Yeah added.

Economists polled by Bloomberg said demand in the external sector was seen as affected by weaker manufacturing and slower electrical and electronics exports, as well as low prices and demand for oil and gas which could influence growth in the fourth quarter.

The decline in oil prices, which currently hover at around US$63 per barrel, will not be a positive factor in growth momentum as the 2019 budget was drafted on the assumption of oil prices at US$70 a barrel.

Downward momentum will likely continue into 2019, which will place pressure on the country in attaining its target revenue of RM261.8 billion this year.

Between January and September 2018, Brent crude oil averaged US$73.1 per barrel.

The trade impasse between China and the US has also had an effect on the global volume of trade.

The US and China were among Malaysia’s top five trading partners in 2017.