In the September quarter, private consumption grew by 6.4 percent year-on-year, following a 6.3 percent rise in the previous quarter, supported by continued wage and employment growth as well as the increase in minimum wage effective July 1, 2016. Public consumption expanded by 3.1 percent, moderating from a 6.5 percent growth in the June quarter, due to lower spending on supplies and services, which partially offset the higher spending on emoluments. Gross fixed capital formation rose 2.0 percent, slowing from a 6.1 percent expansion in the preceding quarter. Private investment advanced by 4.7 percent, following a 5.6 percent rise in the second quarter, mainly supported by continued capital spending in the services and manufacturing sectors. Public investment shrank 3.8 percent, after increasing 7.5 percent in the previous period, due to lower spending on fixed assets by the Federal government. In contrast, exports declined by 1.3 percent, swinging from a 1.0 percent increase in the June quarter. Imports also fell 2.3 percent, as compared to a 2.0 percent growth in the previous three months.
On the production side, services sector grew at a faster pace (+6.1 percent from +5.7 percent in the preceding three month, underpinned primarily by private consumption activity), followed by manufacturing (+4.2 percent from +4.1 percent, supported by export-oriented industries) and mining (+3.6 percent from +2.6 percent). Construction sector increased by 7.9 percent, slowing from a 8.8 percent growth in the June quarter. In contrast, agriculture sector registered a contraction (-5.9 percent from -7.9 percent in the previous quarter, largely due to the lagged impact of El Nino on crude palm oil yields).
Moving forward, Malaysia's GDP is expected to be between 4–4.5 percent in 2016. Domestic demand will continue to be the principal driver of growth. Private consumption is expected to remain supported by wage and employment growth, with additional disposable income from government measures. Investme will continue to be anchored by the on-going implementation of infrastructure projects and capital spending in the manufacturing and services sectors. Export growth is expected to remain weak following subdued demand frim the country’s key trading partners. Overall, while domestic conditions remain resilient, uncertainties in external environment may pose downside risks to Malaysia’s growth prospects.
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 and marking the strongest growth in seven quarters.