Malaysia’s economy grew at a slightly faster pace in the second quarter, according to advanced estimates released Friday, though analysts expect this momentum to fade in the coming months.
Gross domestic product expanded 4.5% year-on-year in the April-June period, edging up from 4.4% in the first quarter, data showed.
The preliminary figure, based on data from the first two months of the quarter, exceeded the Bloomberg consensus forecast of 4.2%.
In seasonally adjusted terms, the economy accelerated to 2.3% quarter-on-quarter growth from 0.7% in the previous three months.
The services sector, which grew 5.3% year-on-year, and construction, which surged 11.0%, were the main drivers of economic expansion. Manufacturing growth lagged at 3.8%.
While a detailed expenditure breakdown won’t be available for several weeks, Capital Economics predicts Malaysia’s economic growth will soften in the coming quarters despite some positive factors.
The country has seen improved employment growth recently and construction activity remains robust, supported by data center development. However, these positives may be offset by several challenges.
As a key commodity exporter, Malaysia faces potential headwinds from declining commodity prices that could impact its mining sector.
Economic growth in its main export markets – the United States and China – is expected to weaken, while tighter fiscal policy will add further pressure.
Given the outlook for easing growth and low inflation, Capital Economics anticipates the central bank will implement further monetary policy loosening later this year, despite planned subsidy cuts.
