Economic growth slows as exports, investments slide

Bank Negara Malaysia forecasts growth of 4.3% to 4.8% this year, compared with the government’s projection of 4.9%.

KUALA LUMPUR: The economy grew at a slower pace in the first quarter than the previous three months, dragged down by weaker trade and investment in the export-reliant nation.

Gross domestic product expanded 4.5% from a year ago, down from 4.7% in the fourth quarter, the central bank said today. The median estimate in a Bloomberg survey of 22 economists was for growth of 4.3%.

Key insights

Growth in domestic demand weakened to 4.4% in the first quarter from 5.7% in the previous three months, on the back of a slump in private and public-sector investment.

The central bank said consumer spending will likely moderate but remain firm. A rebound in agriculture and solid growth in services helped to underpin the economy’s expansion.

Exports contracted in February and March, resulting in quarterly growth of 0.1%. For trade-reliant Malaysia, the renewed tariff tensions between the US and China poses a serious threat to the economy.

Governor Nor Shamsiah Mohd Yunus told reporters that if the trade war worsens it will affect all countries, including Malaysia.

The central bank, which cut interest rates last week, is forecasting growth of 4.3% to 4.8% this year, compared with the government’s projection of 4.9%. Growth risks remain tilted to the downside due to global factors, the bank said.