KUALA LUMPUR, Aug 17 (Bernama) -- The healthy economic growth registered in the second quarter of this year, was buoyed by the ongoing Economic Transformation Programme (ETP) projects, which also mitigated the adverse effect of external headwinds on the nation's economy.
JF Apex Research said the jump in the construction sector via ETP projects could minimise the backdrop in external trade for the upcoming gross domestic product (GDP) quarter results.
It said the booming construction sector is a positive sign for Malaysia's economy in preparation for the dwindling external trade in the second half of 2012.
Compared with the prevailing quarter, Malaysia's GDP continually posted a strong pace in the second quarter at 5.4 per cent year-on-year (y-o-y), against the revised first quarter's 4.9 per cent.
It said such a result was above its house forecast and market consensus of 4.6 per cent y-o-y.
The construction sector grew 22.2 per cent y-o-y in the second quarter and 15.5 per cent y-o-y in the first.
JF Apex Research sees a challenging period ahead and forecasts a lower GDP growth in the third quarter of 4.6 per cent y-o-y, amid the sluggish external trade outlook and weakening domestic consumption due to increasing unemployment in the manufacturing sector.
On the Consumer Price Index (CPI), it said the growth in July of 1.4 per cent y-o-y was within expectation.
In conjunction with the marked down RON 97 petrol prices in early June from RM2.80/litre to RM2.60, the Transport Index decelerated further to –0.5 per cent month-on-month from –0.3 per cent month-on-month previously.
Such a result translated into lower inflation.
If there is no upward revision in RON 97 petrol price in August, JF Apex Research expects the August CPI to further drop to between 1.2 per cent y-o-y and 1.3 per cent y-o-y.
Its is also sticking to the forecast - with two sessions left for the Monetary Policy Committee meeting in September and November - that the Overnight Policy Rate (OPR) will remain at 3.00 per cent for the rest of the year.
It said in its opinion, the current OPR is appropriate to stimulate domestic growth amid a slowdown in external activities, which is expected to affect domestic economic performance within the next four months.
This takes into account the deteriorating trade surplus in the second quarter, which saw a decrease of 21.3 per cent quarter-on-quarter, or RM5.79 billion, when compared to the prevailing quarter of RM27.09 billion.