KUALA LUMPUR -- Stronger household consumption and manufacturing output led Malaysia to 4.9% year-on-year growth in the April-June quarter as the country remained one of Southeast Asia's most vibrant economies, many of which are vying for trade that is being diverted by the U.S.-China rift.
The latest gross domestic product figure, announced on Friday by Malaysia's central bank, was slightly higher than the median forecast of economists polled by Reuters, and accelerated from the 4.5% recorded in the previous quarter.
Manufacturing and mining grew 4.3% and 2.9%, respectively, of which the latter was the first positive growth in nearly two years. The growth was also supported by higher household consumption at the rate of 7.8%.
Malaysia, which is Southeast Asia's third-largest economy by GDP after Indonesia and Thailand, is a large exporter of intermediary goods to China, leaving the nation vulnerable to the Sino-American trade war. Nevertheless, its April-June exports were marginally higher than a year earlier, thanks to strong demand for palm oil, oil and gas, as well as manufactured goods.
The central bank kept unchanged its annual growth forecast of 4.3% to 4.8%, saying household spending and private investment will lead the expansion. However, the bank cautiously stated in its quarterly bulletin published on Friday that "The outlook is subject to downside risks," including worsening trade tensions and extended weakness in commodities-related sectors.
"We are forecasting a further slowdown in global growth over the coming quarters, which would weigh on demand for Malaysia's exports," Alex Holmes, Asia Economist in Capital Economics said. Oxford Economics predicts in a note that the Malaysian growth rate will slow further to 4.4% in 2019 and 4.2% in 2020.