Malaysia's economy is expected to have picked up pace in the third quarter, bolstered by resilient domestic demand and a small but significant recovery in exports.
After struggling in the first half of 2013, Malaysia's exports are growing again, helped by higher demand for the country's crude oil and electronics shipments.
Exports grew every month in third quarter. In September, they rose 5.6% from a year earlier, boosted by Southeast Asian demand for refined petroleum products and higher electronics. September's trade surplus was the biggest since November 2012.
The median forecast of a Reuters poll was 4.8% growth in third-quarter gross domestic product from a year earlier, picking up from 4.3% in the second quarter. The forecasts ranged from 3.6 to 5.3%.
Few analysts give quarter-on-quarter growth estimates. Full-year growth was seen at 4.7%, down from 4.9% in an August poll.
Alan Tan, economist at Affin Investment, who forecast 5.3% third-quarter growth, said the improvement in exports was key.
Malaysia's industrial production hasn't matched the growth in exports. In September, factory output rose just 1.0% from a year earlier, well below expectations.
Patricia Oh, economist at AmBank, said export-oriented demand will feed through to boost factory output in coming months.
"We expect international trade to support economic growth in the fourth quarter, and growth in the manufacturing segment will be able to rely on external demand," she said.
Malaysia's finance ministry last month forecast a slight pick-up in next year's GDP growth to 5.0-5.5% from an expected 4.5-5.0% in 2013.
The country's central bank kept interest rates unchanged earlier this month but said it expected inflation to edge higher over coming months. The central bank said price pressures would be tempered by factors including stable external prices as well as improvements in food production and distribution.
Malaysia's third-quarter current account data will be released with GDP data tomorrow. In the second quarter, the surplus narrowed to 2.6 billion ringgit from 8.7 billion ringgit in January-March.
The narrowing current account surplus, a chronic budget deficit and high debt burden have weighed on the ringgit as well as Malaysian stocks and government bonds but the worst appears to be over. The ringgit has come off the year's lows while foreign demand for Malaysian government bonds rose in September, after four months of falls.
Investor concerns have been allayed by the government's steps to improve public finances. Prime Minister Najib Razak cut fuel subsidies in September and the following month announced a new flat rate consumption tax starting in April 2015. - Reuters, November 14, 2013.