Malaysia's third quarter GDP slips to 5.6 per cent year-on-year on narrowing trade surplus

Petronas Twin Towers in Kuala Lumpur. Malaysia's economic growth slipped from 6.5 to 5.6 per cent year-on-year for the third quarter on a narrowing trade surplus amid shaky global recovery and private investors tightening their belts ahead of ex
Petronas Twin Towers in Kuala Lumpur. Malaysia's economic growth slipped from 6.5 to 5.6 per cent year-on-year for the third quarter on a narrowing trade surplus amid shaky global recovery and private investors tightening their belts ahead of expected increasing cost. -- PHOTO: ST FILE

MALAYSIA's economic growth slipped from 6.5 to 5.6 per cent year-on-year for the third quarter on a narrowing trade surplus amid shaky global recovery and private investors tightening their belts ahead of expected increasing cost.

But the central bank insisted it was not below expectations "in light of the challenging environments" and expected further headwinds next year.

"Inflation going forward is expected to trend above long-term average. Exports have shown signs of moderation," Bank Negara governer Zeti Aziz told a press conference on Friday morning.

She said growth is still expected to come in at between 5.5 to 6 per cent this year, and between 5 to 6 per cent in 2015.

The economy grew at a surprising 6.35 per cent in the first half of the year but weaker-than-expected external demand and talk of surging inflation once a new consumption tax is introduced in April has subdued optimism.

The consumer price index is expected to hit up to 5 per cent next year due to the broad-based Goods and Services Tax (GST) .

The slide in crude oil prices in the past month has also led to concerns over the government's ability to support the economy, as about 30 per cent of fiscal revenue comes from petroleum. 

Malaysia is also one of the world's biggest exporters of palm oil, which is tightly-linked to crude oil.

"The fiscal position is being rationalised. Now with GST and subsidy rationalisation, we will have to assess based on all these implications on revenue," Ms Zeti said.

Private investment growth was nearly halved from 12.1 per cent last quarter to 6.8 per cent due to a drop in spending on business equipment.

shannont@sph.com.sg