April’s better-than expected trade performance is suggesting a healthy second quarter GDP (gross domestic product) growth, says Finance Minister Lim Guan Eng.In a statement yesterday, Lim said Malaysia’s 4.4% year-on-year (y-o-y) increase in imports to RM74.3bil in April versus Bloomberg’s market consensus survey of a 0.3% contraction, is “important”.
“Imports reflect domestic demand, and its increase suggests private consumption,” the statement said.
“And it came after the first quarter GDP expanded by 4.5% from a year ago, again besting Bloomberg market consensus of 4.3%,” he said.
Lim said April 2019 imports for consumption goods rose by 18.9% (y-o-y), after rising a strong 10.5% in March.
Furthermore, April 2019 imports for intermediate goods ballooned by 20.3% y-o-y after inching up by only 3.2% in March. Intermediate goods are used to make end products.
“The strong expansion of both consumption and intermediate goods imports indicate that the second quarter GDP growth will be robust,” he said.
He said this positive trade development took place amid a steady inflation rate of 0.2% y-o-y in April, a low unemployment rate of 3.4% in March, and along with expected continuous expansion in industrial production this quarter.
Nielsen’s Consumer Confidence Index for the first quarter of 2019 also showed economic confidence among Malaysian consumers in the next 12 months, as the index surged 11 points to 115 points from 104 points a year ago.
Meanwhile, the 1.1% growth in April exports to RM85.2bil, which also beat Bloomberg’s survey estimates, will keep the country’s annual current account balance in surplus.
“The export growth, despite the persisting trade war between two of the world’s largest economies, highlights Malaysia’s competitiveness on the global stage,” said Lim.
“This will shield the country from excessive volatility caused by external events like the disruptive, ongoing trade war,” he added.
Lim highlighted a recent Nomura research report that ranked Malaysia as the fourth biggest beneficiary of trade diversion from the ongoing trade war.
He cited the 48% growth in approved foreign direct investments (FDI) in 2018 to RM80.5bil from RM54.4bil in 2017 as a result of the trade diversion.
“Nevertheless, Malaysia hopes that the trade war will end because eventually there will be no winners, only losers.
“All parties should instead enhance cooperation at the regional and global levels to allow the global economy to grow sustainably,” he said.
– The Star