The Malaysian economy expanded by 4.5 percent year-on-year in the December quarter of 2015, moderating from a 4.7 percent growth in the previous period but above market expectations. It is the weakest expansion since the second quarter of 2013, as an increase in private and public consumption and exports were unable to offset a slowdown in investment.
In the fourth quarter, private consumption grew by 4.9 percent year-on-year, accelerating from a 4.1 percent growth in the previous quarter. The expansion was supported by stable wage growth and labour market conditions. Public consumption expanded by 3.3 percent from 3.5 percent increase in the September quarter, as the stronger growth in emoluments was offset by slower growth in supplies and services expenditure. Gross fixed capital formation grew 2.8 percent, slowing from a 4.2 percent expansion in the third quarter. Private investment advanced by 5.0 percent, after expanding 5.5 percent in the preceding quarter, driven by capital spending in the manufacturing and services sectors. Public investment rose 0.4 percent, following a 1.8 percent increase in the September quarter, following lower growth in fixed assets spending by the Federal Government. Exports increased by 3.7 percent, accelerating from a 3.2 percent growth in the third quarter. Imports grew by 3.6 percent, as compared to a 3.2 percent rise in the previous three months.
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On the production side, mining sector registered a contraction arising from the lower production of both crude oil and natural gas. In contrast, an expansion was seen in services sector (+5.0 percent from +4.4 percent in the previous quarter), manufacturing sector (+5.0 percent from + 4.8 percent expansion, supported mainly by domestic-oriented industries) and construction sector (+7.4 percent from + 9.9 percent growth in the third quarter, supported by the civil engineering and residential sub-sectors). Growth in agriculture sector moderated, reflecting lower production of palm oil.
Moving forward, Malaysia's GDP is expected to face a challenging operating environment in the immediate future. Growth will continue to be driven by domestic demand, with some support from net exports. Nevertheless, the pace of domestic demand expansion is projected to moderate.
For full year of 2015, the economy advanced by 5.0 percent, as compared to a 6.0 percent expansion in the preceding year. The figure was within the government's and central bank's target of GDP between 4.5 percent to 5.5 percent.
On a quarter-on-quarter seasonally-adjusted basis, the economy grew by 1.5 percent, accelerating from a 0.7 percent expansion in the previous three months. It is the fastest growth since the fourth quarter of 2014.