Malaysian GDP surprise markets on the upside following boost in private consumption

Malaysian gross domestic product surprised markets, registering 4.2 pct, against expectation of 4 pct on rise in private consumption. However, this marks the slowest growth since mid-2009, albeit better than market projections.

Commodities continued to slowdown, being deadweight to the economy, even as exports of manufactured goods tried to keep the whole thing above water. As a result, despite a fairly steady growth in imports, the net exports registered a 12.4% y/y slump that hurts the overall growth print, OCBC Bank reported.

The newly appointed Governor, Ibrahim said that the economy remains on track to expand by 4.0-4.5% this year. He further said that the current Overnight Policy Rate remains supportive of economic activities. That is as good a hint as any that the BNM governor is not at all keen to cut rate and shift away from the cautious and prudent policy stance that has been set in place by his predecessor, Dr. Zeti Aziz, any time soon, the report added.

"If external risks do not blow up, we remain sanguine about the prospect of 4.4% growth this year," OCBC Bank commented in the research report.

Meanwhile, the MPZ meeting on May 19 is unlikely to spur any major policy fireworks. At a time when external trade, especially on the commodities front, remains too much like fair-weather friends, the fact that domestic consumption has been a more trustworthy source of growth will not escape the consideration of the central bank.