KUALA LUMPUR, May 27 -- The economy surprised analysts by shrinking at the fastest pace since 1998 during the first three months of this year, but they are not overly concerned as they feel that the first quarter suffered the brunt of the slowdown, and are still forecasting growth by year end.
CIMB chief economist Lee Heng Guie said that the first quarter GDP contraction of 6.2 per cent was the sharpest decline since the third quarter of 1998 which recorded a -10.2 per cent growth rate.
“The external headwinds hit the economy in full force in the first quarter,” he told The Malaysian Insider.
He said however that compared with Singapore and Thailand which registered a negative growth of 10.1 and 7.1 per cent respectively, Malaysia was not doing too badly.
Lee is also maintaining that the economy will bottom out in the next few months before recording a 1.3 per cent growth in the last quarter.
“Early signs indicate stability,” he said.
OSK’s head of research Chris Eng had expected the economy to contract between two and three percent and attributes the much sharper reduction of 6.2 per cent to a lack of effect from the stimulus packages.
“Pump priming has not kicked in yet,” he said. “The construction sector is still slow.”
He however expects the impact to the stock market to be minimal.
“Sentiment will be hit but the market had already factored in the worse than expected results today.”
Eng also points out that the manufacturing sector that was badly hit by falling demand involved mostly the multi-nationals and not local companies.
“Exposure for corporate Malaysia is limited.”
Eng also sees a bottoming out of the economy during the next two quarters and growth in the fourth quarter.
Show/Hide comments
Show/Hide comment form
come on, statistics only show what you want. isnt it mr Lee?