KUALA LUMPUR: The lower gross domestic product (GDP) growth posted for the second quarter (Q2) of this year, has been attributed to reduced growth in the commodity sector due to external factors which affected Malaysia's exports, said economists.
Sunway University Business School Economics Professor Dr Yeah Kim Leng said the mining and agriculture sectors were open to various challenges and uncertainties, leading to fluctuations based on market demand.
“However, both commodities, will pick up again in the next quarter as the dust has settled from the unexpected outcome of the 14th General Elections, as well as when China-US trade tensions subside,” he told Bernama.
The US and China will be resuming talks on trade next week. It comes two months after the US imposed tariffs on Chinese products and the White House said it was open to discussions on structural issues.
“Both countries are well aware of the repercussion of a full blown trade war and investors are hoping for a positive outcome from the talks,” Yeah said. He was also positive that the next quarter (Q3) would be better, boosted by the continued growth in the services and manufacturing sectors.
With the country now in a better position, he said domestic private investments and foreign direct investments would soon return to support the local economy.
“Confidence is up. Backed by higher domestic spending following a tax holiday and an increase in spending on consumer-related products, we expect better growth in Q3,” Yeah added.
Meanwhile, FXTM Global Head of Currency Strategy and Market Research Jameel Ahmad in a statement said the GDP would likely accelerate some underlying concerns from the overall growth outlook.
“We are starting to see what could be a trend of emerging market growth in the Southeast Asian region which is trending lower. The GDP reading from Singapore last week also missed expectations,” he said.
Singapore's economic growth slowed to 3.8 per cent in the second quarter from a year ago as momentum in both the manufacturing and services sectors, reportedly due to the growing risks from US-China trade tensions.
“The ongoing trade war concerns and the underlying political risk from the unpredictability of US President Donald Trump's administration is an ongoing theme that investors have to continuously monitor.
“It does certainly hold the potential to have a negative impact on economic growth,” Jameel said.
Earlier today, Bank Negara Malaysia announced that Malaysia's registering a slower 4.5 per cent growth for Q2 of 2018 compared with 5.8 per cent in the same period last year.
Governor Nor Shamsiah Mohd Yunus said Malaysia's economy is expected to remain on a steady growth path going forward with growth supported mainly by private sector consumption and investments. - Bernama
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