News Column

ASEAN Market Review: Indonesia's & Malaysia's 1Q Growths Decelerate

May 20 2013 12:00AM

Marketwire

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SINGAPORE, SINGAPORE -- (Marketwired) -- 05/20/13 -- In FXPRIMUS' ASEAN Market Review for 17 May, leading global foreign exchange trainer, educator and author Mario Sant Singh - whose views are widely sought after in the Forex industry, focuses on growth drop-off in Indonesia and Malaysia.

Economic Insights

Malaysia's 1Q Gross Domestic Product (GDP) unexpectedly grows less than 5%

Malaysia's 1Q growth rose by just 4.1% YoY, much lower than the earlier forecast. The growth figure was also down from a 6.5% YoY growth rate in the fourth quarter last year. Yet, the official figure maintained the full-year growth target around 6%.

To view figure 1, please visit the following link:

http://media3.marketwire.com/docs/874977A.jpg

International trades largely dragged growth as overseas shipment activities shrank 2.9% YoY in March, while imports unexpectedly rose to 7% YoY. However, jumped consumption on election spending helped the total growth above 4% in the first quarter. Consumption in the 1Q jumped 6.1% YoY, which means it will remain the key driver for the entire growth.

To view figure 2, please visit the following link:

http://media3.marketwire.com/docs/874977B.jpg

Moving forward, personal consumption levels play a key part in GDP components as Malaysian Prime Minister Najib Razak adopted a few tools to boost domestic demand to counter weaker international demand, such as welfare to those in poverty, higher wages and extending energy subsidies.

Despite weak exports and a strong Ringgit, the central bank still holds the benchmark interest rate unchanged at 3% while the "currency war" leads many developed and developing nations to lower their rates.

"In my point of view," said Mario, "the recent rising Consumer Price Index (CPI) may slightly gain attention from Bank Negara Malaysia." Thus, the central bank comments that the monetary condition is still presently accommodative.

To view figure 3, please visit the following link:

http://media3.marketwire.com/docs/874977C.jpg

Indonesia's GDP slows to 6.02% in first quarter

The Indonesian economy's growth also slowed to 6.02% YoY, the slowest pace in the past two years, led by fading exports and government spending. Growth rate in the previous quarter was 6.11% YoY.

To view figure 4, please visit the following link:

http://media3.marketwire.com/docs/874977D.jpg

"The slower growth may give officials some difficulty in cutting fuel subsidies and prompting reforms," said Mario." Government infrastructure spending also has a large space to increase. Exports also reflected the negative outlook when a group of exporting commodities fell, such as palm oil, coal and rubber," he added.

"Given the large decline in exports, the central bank will likely hold the rate at a record low 5.75%, despite inflation picking up," said Mario. "The central bank will seek other prudent tools to curb rising inflation instead of a rate cut," he added.

To view figure 5, please visit the following link:

http://media3.marketwire.com/docs/874977E.jpg

Previous ASEAN Market Review: ASEAN Market Review for 12 April 2013: Limited Easing Space For Bank Of Indonesia (BI)

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Source: Marketwire


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