Malaysia's gross domestic product (GDP) growth forecast for 2011 has been revised to 5.1% from 4.6%, owing to stronger-than-expected GDP in third quarter, said Hong Leong Investment Bank (HLIB).
“Real GDP growth rose to 5.8% year-on-year in third quarter, spurred by robust government services, rebound in manufacturing output and higher growth in the agricultural sector. On the demand side, growth was led by strong performance of all domestic demand components,” it said.
HLIB said the official figure was “much higher” than its estimate and consensus of 4.7% and 4.8% respectively.
“It is interesting to note that economists have remained relatively pessimistic on Malaysia's economic growth since the turnaround in the second quarter of 2009. Compared with the official numbers, consensus estimates had been lower, on average, by 0.5% since the second quarter of 2009.
“Perhaps, the structural changes have not been fully appreciated by the Main Street analysts,” the bank said.
HLIB said it had revised upward the GDP growth rates for the first and second quarters by 0.3 percentage points to 5.2% and 4.3% respectively.
For the first nine months, GDP growth had already averaged 5.1%, it said, adding: “Factoring in our fourth -quarter forecast of 5% (unchanged), we now raise our full-year GDP forecast to 5.1% from the previous 4.6%.”
It said the surprisingly robust third-quarter growth could imply domestic economic structure was more resilient than expected.
The diversification into commodities-related activities may turn out to be a blessing next year.
“We also expect consumer spending to remain strong on changing lifestyle, a favourable job market and strong net wealth position of households,” it said.
HLIB said while the global environment remained uncertain, it was “still of the opinion that most of the domestic sectors will remain resilient next year”.
“At this juncture, we maintain our forecast that economic growth will remain stable at 4.5% in 2012. The slower manufacturing growth will be cushioned by stronger construction capital outlays which will benefit downstream activities as well as a turnaround in mining output,” it said.