A quick reaction to Malaysia’s RGDP growth for the fourth quarter: it is ironic and there is no cause for celebration

 

The high 6.4% growth hides something worrying 

Hafiz Noor Shams 

So, the Malaysian economy grew by 6.4% from a year ago in the final quarter of 2012. [Malaysia’s economy grew 6.4% in Q4, 2012, fastest in 9 quarters] 

When I first saw the headline figure, I was pleasantly surprised. Upon closer inspection however, the whole growth figures appeared weird. After I figured out why it was weird, I became uncomfortable with the high growth rate.

Domestic demand growth slowed significantly (it slowed by 3.9 percentage points in fact from the last quarter). That was the first sign that something was not right. The private demand growth figure is particularly worrying. I had expected its growth to moderate slightly but it slowed by 2.4 percentage points. That is a lot.

Here comes the ultimate irony: trade saved Malaysia.

Despite the bad trade numbers we saw throughout the quarter, the one that pushed growth way above market consensus was net exports. This is where the weirdness comes in: both exports and imports contracted.

How was that possible?

Read more at: http://maddruid.com/?p=11287