Q3 GDP figures likely to confirm that worst is over

 

THE Malaysian economy is likely to show improvement in the third quarter and confirm that the country, along with the rest of Asia, is past the worst of the global recession, said economists.

Economists polled by the Business Times expect the economy to contract 2.37 per cent in the July-September quarter, before turning in a positive growth of 1.67 per cent in the last three months of 2009.

Gross domestic product shrank 3.9 per cent in the second quarter.

They expect the economy to contract 2.63 per cent this year and rebound with a 4 per cent growth in 2010. Both figures are better than the government's official forecast.

Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz will release the data today.

"Though Malaysia's recovery is trotting along, we strongly believe the recession has passed its worst point," said AmResearch senior economist Manokaran Mottain.

Recent indicators like industrial output, gross exports, vehicle sales and external reserves have all improved from their lows and are showing signs of further improvement, he added.

US investment bank Citi expect slower declines in manufacturing activities in the third quarter, led by improvements in the crucial electrical and electronics sector, the largest segment of Malaysia's manufacturing sector.

"We note that the June-August period marked the first three consecutive months of sequential growth in manufacturing production in more than two years.

"While the mining and quarrying production likely worsened in the third quarter from the second quarter, this was offset by sharp improvements in electricity production, which turned positive in third quarter, for the first time in a year," said economist Kit Wei Zheng.

DBS Bank is confident Malaysia will grow 5 per cent next year, driven by continued government spending and low borrowing costs.