, Malaysia

Malaysia's full year GDP growth predicted to hit 5.5%

What could be the macro headwinds?

According to DBS, first quarter GDP is on tap today and the headline figure is expected to reflect a fairly sanguine economic outlook despite the external drag.

Although GDP growth will likely ease off from the rapid 6.4% YoY expansion registered in the final quarter of last year, it should still remain healthy at about 6.0% in the first quarter.

But sequential growth momentum will moderate more significantly to 4.8% QoQ saar, from 9.0% previously.

Here's more from DBS:

This largely reflects a bottoming-out and indeed, a weaker than expected growth outlook in the external environment.

Domestic growth will remain in the driving seat. Strong investment and consumption demand on account of the domestic optimism and the pre-election stimulus will likely keep growth afloat despite the weak economic conditions abroad.

Private consumption is supported by sustained income growth amid stable labour market conditions, while investment activity is being led by capital spending in the domestic-oriented sectors, and progress in the implementation of infrastructure projects.

Going forward, growth momentum should remain firm as long as there is no major negative shock in the global economy. And that should ensure a full year GDP growth of 5.5% in 2013, which is in line with the medium term growth potential of the country.

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