MOODY'S expects Malaysia's gross domestic product (GDP) to have expanded by five per cent in the second quarter of this year following strong domestic activity.
High-frequency data suggests that the economy grew by five per cent year-on-year in the second quarter, after posting a 4.7 per cent growth in the first quarter, it said in its Analytics Asia Pacific preview yesterday.
"We expect strong domestic activity to have spurred the traditionally export-led economy through the tough global headwinds," Moody's said.
It said that the GDP growth was likely to have improved as robust domestic demand offset weak exports, adding that retail trade reports will show mixed outcomes.
"Going forward, we expect robust public and private investment will support activities, however, weak western and regional demand still pose a downside risk to growth," said Moody's.
Bank Negara Malaysia is due to release the data for second quarter GDP tomorrow.
The central bank has forecast a GDP growth of between four and five per cent this year on the back of a strong domestic economy, having trimmed its earlier estimate of between five and six per cent.
Economists agree that with Malaysia becoming less sensitive to global growth, domestic economy will remain the impetus for economic growth.
They said private spending will be driven by rising wages and government spending is expected to surge ahead of the upcoming election and will cushion any weakness in external demand.
Some said private spending is anticipated to contribute 4.4 per cent points to the overall GDP growth this year.
The International Monetary Fund had earlier this year warned that the second half of this year would see weaker growth in both advanced and key emerging markets.