MALAYSIA’S 2Q 2022 gross domestic product (GDP) which is expected to be released mid-day today could turn out stronger than expected, probably even increasing by a double-digit growth of 10% year-on-year (yoy), according to TA Securities Research.
Against the backdrop of a robust Volume Index of Services that posted a double-digit growth of 16.7% yoy in 2Q 2022 (1Q 2022: 7.0% yoy), the research house expects the 2Q 2022 GDP to be much higher than its initial projection of 6.2% yoy.
“Based on the Volume Index of Services data, the services sector is now projected to be more robust at 13.5% yoy in 2Q 2022 (1Q 2022: 6.5% yoy),” observed economists Shazma Juliana Abu Bakar and Farid Burhanuddin in a Malaysian GDP preview.
“Previously, we anticipated the services sector to grow by only 8.0% yoy. The services sector contributed about 58.1% of GDP in 1Q 2022 and has 97.1% correlation with the Volume Index of Services from 1Q 2018 until 1Q 2022.”
Meanwhile, a bullish Maybank IB Research is predicting the 2Q 2022 real GDP growth to accelerate to +11.7% yoy (1Q 2022: +5.0% yoy; 2021: +3.1%) on the back of 2Q 2022’s Industrial Production Index (IPI) and Index of Services (IOS) which rose to +6.9% yoy (1Q 2022: +4.5% yoy) and to +16.7% yoy (1Q 2022: +7.0% yoy) respectively.
“(Elsewhere), Construction Works’ Value rebounded +6.1% yoy (1Q 2022: -6.1% yoy) while crude palm oil (CPO) output declined -5.0% yoy (1Q 2022: +3.9% yoy),” noted chief economist Suhaimi Ilias and team.
“Based on these indicators, we estimated real GDP grew +11.7% yoy in 2Q 2022 (1Q 2022: +5.0% yoy).”
Hong Leong Investment Bank (HLIB) Research expects the 2Q 2022 GDP to expand by +9.0% yoy (consensus forecast: +7.0% yoy), underpinned by stronger performance in the services, manufacturing and construction sectors.
“On the demand front, private consumption will drive overall growth following the reopening of international borders and release of pent-up demand,” justified economist Felicia Ling and team.
“Pending the release of actual 2Q 2022 GDP print, we keep our 2022 forecast unchanged at +5.9% and expect Bank Negara Malaysia (BNM) to raise its overnight policy rate (OPR) by another 25bps (basis points) in September.” – Aug 12, 2022
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