Malaysia Q3 economic growth, current account surplus weakest in more than 2 years

An investor monitors share market prices in Kuala Lumpur, Malaysia.
An investor monitors share market prices in Kuala Lumpur, Malaysia. PHOTO: REUTERS

KUALA LUMPUR (REUTERS) - Malaysia's economy grew 4.7 per cent in the third quarter from a year ago, its slowest rate in over two years, but meeting analyst expectations.

Its current account surplus narrowed to RM5.1 billion (S$1.65 billion) in the period from RM7.6 billion in the previous three months, its lowest since the second quarter of 2013.

Growth has been on a downtrend this year, having expanded by 5.6 per cent in the first quarter and 4.9 per cent in the second quarter.

"Although the economy is facing a considerable number of shocks, it has remained resilient as reflected by the steady growth performance of our economy," Bank Negara Malaysia Governor Zeti Akhtar Aziz told a news conference. "Current situation warrants however, a high degree of alert but not alarm."

Growth was is line with a 4.7 per cent projection, according to a Reuters poll of economists, who saw weakness in domestic consumption as the main reason for a slowing.

Southeast Asia's third largest economy has had to weather multiple risks to growth this year, from falling commodity prices, dampening demand from China and uncertainties in domestic politics.

The ringgit has been Asia's worst performing currency this year, losing almost 20 per cent. The ringgit stayed flat, ranging between 4.3770-4.3820 after the GDP data was released.

Governor Zeti has said the ringgit is significantly undervalued at the current levels.

"It does not reflect the country's fundamentals as the current account remains in surplus, unemployment remains low and inflation is within Malaysia's long term average," she said.

Exports jumped in September, rising more than twice the forecast on the back of a weaker ringgit and demand for electrical and electronic products from the U.S and Europe.

Malaysia's exports and imports were up 3.2 per cent in quarter, the data showed.

Inflation was at 3 per cent in the third quarter, and is expected to peak in the first quarter of next year before moderating.

Investor sentiment has been hurt by alleged graft and mismanagement at state investor 1Malaysia Development Berhad (1MDB). The scandal has rocked Malayia's politics, with the opposition parties and critics of Prime Minister Najib Razak asking for him to step down over the scandal.

The central bank had urged the country's attorney general to begin criminal prosecution of 1MDB after completing its investigation, but the call was rejected.

Ms Zeti said the bank will continue to request for information from 1MDB and if not given, the fund's subsequent requests for approval can be rejected.