The Department of Statistics, in its first quarterly advance GDP release, showed that 3Q23 GDP expanded by 3.3% (2Q23: 2.9%). This is higher than the forecast of 1.7% by Kenanga and Bloomberg’s consensus of 2.7%
Kenanga said, that according to the DOSM, the advance GDP estimates for3Q23 are compiled based on data from the first two months of the quarter. It added that the GDP growth is subject to revision when more comprehensive data becomes
available. The estimates, however, only showed the supply-side components of GDP.
Overall, GDP grew by 3.9% in the first three quarters of 2023 versus 9.2% recorded in the same period of last year. The services, construction, and agriculture sectors are the main contributors to 3Q23 advance GDP growth estimates. However, the growth momentum was partially capped by the contraction in the manufacturing and mining sectors. The services sector expanded to 5.1% (2Q23: 4.7%), contributed by growth in wholesale & retail trade, transport & storage, and business services sub-sectors. This was also due to expansion in the food & beverages, and accommodation sub-sectors. However, it was capped by a decline in finance & insurance sub-sectors.
Construction sector is estimated to slow to 5.8% (2Q23: 6.2%), with growth mainly supported by civil engineering
and specialised construction activities. Agriculture sector rebounded to 0.8% (2Q23: -1.1%) following a contraction in the preceding quarter. This was attributable to the performance of palm oil, livestock and other agriculture sub-sectors. However, the momentum was partially weighed by a decline in fishing, rubber, and forestry & logging sub-sectors.
The manufacturing sector fell by 0.1% (2Q23: 0.1%) due to weak performance by electrical, electronic & optical products, followed by petroleum, chemical, rubber & plastic products as well as textiles, wearing apparel & leather products, following subdued external demand. Nonetheless, growth was partially supported by domestic demand, as reflected in the domestic-oriented manufacturing sectors such as beverages & tobacco products, transport equipment, and other manufacturing & repair.
Similarly, the mining and quarrying sector also fell by 0.1% (2Q23: 2.3%), weighed by the decline in the production of natural gas sub-sector. Nonetheless, it was supported by an expansion in the other mining & quarrying and supporting services, and crude & condensate sub-sectors.
Kennagsa said it will retain its cautious outlook, as the house expects the manufacturing downturn amid weak external
demand to weigh on GDP growth as reflected in the subdued Manufacturing PMI in September (46.8; Aug: 47.8). In addition, export growth has also contracted sharply in 3Q23 (-15.2%; 2Q23: -11.1%) for the second straight quarter, which could potentially drag the overall 3Q23 growth.
The house also expects domestic demand to support GDP growth, backed by a lower unemployment rate
(Aug: 3.4%; Jul: 3.4%) and sustained growth in distributive trade sales (Aug: 6.7%; Jul: 7.1%) amid an increase in
tourist arrivals and spending. Meanwhile, distributive trade is expected to sustain growth in September, with overall
growth to expand to 6.4% in 3Q23 (2Q23: 5.7%), thereby supporting the GDP growth.
Full-year GDP forecast is maintained at 3.5% – 4.0%, within the MoF’s latest projection of 4.0%.
