GDP growth in Q2 likely to be robust, says finance ministry

Malaysia recorded total trade of RM159.5 billion in April, up from RM155.5 billion in April a year ago.

KUALA LUMPUR: Malaysia’s export data for April, which recorded positive growth of 1.1% to RM85.2 billion, is an early sign of a robust second quarter (Q2) gross domestic product (GDP) growth.

Finance Minister Lim Guan Eng said imports recorded a 4.4% year-on-year (y-o-y) rise in April, which reflects strong domestic demand.

“This comes after the first quarter GDP expanded by 4.5% from a year ago, besting Bloomberg’s market consensus of 4.3%,” he said in a statement today.

Total trade rose to RM159.5 billion in April after having increased by 2.6% y-o-y from RM155.5 billion a year ago.

Lim said April imports for consumption goods rose by 18.9% y-o-y, after rising at an already strong rate of 10.5% in March, while imports for intermediate goods ballooned by 20.3% year-on-year after inching up by only 3.2% cent the previous month.

“The strong expansion of both consumption and intermediate goods imports indicates that Q2 GDP growth would be robust,” he said.

He said the positive trade development happened amid a steady inflation rate of 0.2% y-o-y in April, low unemployment rate of 3.4% in March, and along with an expected continuous expansion in industrial production this quarter.

Quoting the Nielsen’s consumer confidence index for the first quarter of 2019, Lim said the data showed Malaysian consumers were confident of their economic prospects in the next 12 months, as the index surged 11 points to 115 points from 104 points a year ago.

“The improvement in exports has enabled Malaysia to record a trade surplus of RM10.9 billion in April. This brings the country’s total trade surplus for the first four months of 2019 to RM47.8 billion.

“The comfortable year-to-date surplus will help keep Malaysia’s annual current account balance in surplus too. This will shield the country from an excessive volatility caused by external events like the disruptive, ongoing trade war,” he said.

As for the ongoing trade spat between the United States and China, Lim said Malaysia had benefited from it through trade diversion and business relocation.

He said the diversion was reflected in approved foreign direct investments, as it increased by 48% in 2018 to RM80.5 billion from RM54.4 billion in 2017.

“Nomura recently identified Malaysia as the fourth biggest beneficiary of trade diversion after Vietnam, Taiwan and Chile.

“Apart from trade diversion resulting in rising exports, Malaysia will likely benefit from investment diversion that arises from the reconfiguration of the global supply chain,” he said.