This article first appeared in The Edge Financial Daily, on February 16, 2016.

KUALA LUMPUR: Malaysia’s gross domestic product (GDP) growth in the fourth quarter of 2015 (4Q15) is expected to be in the range between 4.3% and 4.7% year-on-year (y-o-y).

When contacted yesterday, RHB Research Institute Sdn Bhd chief economist Lim Chee Sing said GDP growth is expected to slow to 4.4% y-o-y in 4Q15.

He pointed out that manufacturing growth had moderated on the supply side and this was reflected in export growth as well. “Domestic demand may have remained resilient, but was also on a weakening bias ... private investment was affected by falling oil and gas investment and a downturn in the property sector,” he said.

Lim also highlighted that consumer spending was weighed down by rising cost of living, high household debt servicing and a softening employment market.

While the public sector could have provided some support to growth, however, he opines that it would likely be insignificant due to constraints on government finances.

Independent economist Lee Heng Guie said despite seeing growth in exports in 4Q15, overall growth in headline GDP for the quarter is expected to slow down to 4.3% y-o-y from 4.7% y-o-y recorded in 3Q15.

“Mining is likely to see a larger drag. Except for a still quite resilient manufacturing sector, the other sectors like services, construction and agriculture are expected to see a further slowdown,” he said.

“Combined with dampened consumer sentiment and private sector sentiment, we will see a further slowdown in consumption and investment,” he added.

According to the department of statistics, exports grew by 1.9% y-o-y to RM779.95 billion last year, while imports were rather flat at 0.4% y-o-y to RM685.65 billion. Trade surplus registered a higher growth of 14.3% last year.

Meanwhile, Hong Leong Investment Bank Bhd economist Sia Ket Ee, however, said GDP growth in 4Q15 is expected to remain quite resilient, with a flat growth of 4.7% compared with 3Q15.

He said the slowdown in the manufacturing sector is offset by a recovery in the services sector, particularly the finance sub-sector. “The finance sub-sector was affected quite badly in the third quarter because of the stock market turmoil which happened in August and September last year, but after that, we have seen an improvement and normalisation in market volume, and that is expected to help attain a recovery in the finance sector,” he said.

“In terms of retail and wholesale trade, we expect [the] growth rate in 4Q15 to be somewhat higher than 3Q15,” he added.

Sia said the statistics point to a slight recovery in wholesale trade. “If you put everything into perspective … yes, of course, a lot of economists are reading a lot into the slowdown in industrial production index growth, but don’t forget, the services sector accounts for more than 50% [of the economy].”

“Because of these improvements in the finance and retail/wholesale sub-sectors, we are expecting that whatever slowdown in the manufacturing sector will be cushioned by a recovery in the services sector, and hence leading to a quite resilient growth in 4Q15 overall GDP,” he added.