KUALA LUMPUR: Hong Leong Investment Bank Bhd (HLIB) expects the first quarter 2023 (1Q23) gross domestic product (GDP) to record slower growth of 5.2 per cent year-on-year (y-o-y) compared with 7.0 per cent y-o-y in 4Q22, weighed down by moderations of growth across all sectors.
On the demand side, the investment bank said private consumption is expected to continue to be the most significant driver of growth, albeit at a slower pace.
“We expect a moderation in the manufacturing sector, reflected by the slowdown in the manufacturing Industrial Production Index (IPI) in 1Q23 which came in at 3.4 per cent y-o-y against 4.0 per cent y-o-y in 4Q22.
“This was largely due to the slower export-oriented manufacturing activity during the quarter amidst the weakening global growth and tepid international demand,” it said in a note today.
It noted that domestic-oriented production continued to strengthen, growing at 6.0 per cent y-o-y during the quarter compared with 3.2 per cent y-o-y in 4Q22.
Growth in the services sector is also expected to slow, in line with the more modest volume index of services.
“Nevertheless, we see services growth to be supported by the rise in tourist arrivals as well as domestic demand following the Chinese New Year and pre-Hari Raya celebration.
“This is shown by the continued growth in the wholesale and retail trade, food and beverages and accommodation sectors, albeit at a softer pace,” it said.
HLIB said the mining sector is also expected to moderate as production slowed down due to softer crude petroleum and natural gas production.
“We also expect slower growth in the agriculture sector, largely due to the softer palm oil production during the quarter, dampened by the heavy rainfall and floods in March,” it said.
Meanwhile, the construction sector is expected to continue to support growth following a pickup in the value of construction work done in 1Q23, mainly in civil engineering and non-residential buildings, it added.
Bank Negara Malaysia is scheduled to announce the 1Q23 GDP results tomorrow. – BERNAMA
