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Thursday, August 18, 2011

Economic news – 2Q11 GDP (CIMB)

Economic news – 2Q11 GDP: Obstacles abound along the path to recovery The easing of Malaysia’s GDP growth to 4.0% yoy in 2Q11 (4.9% in 1Q11) does not come as a surprise to us as we had expected the economy to enter a soft patch in 2Q11, caused by the Japan-induced global supply chain disruptions, uneven export growth and high base effects. Domestic demand still calls the shots, sustained by resilient consumer spending and private investment growth. Looking ahead, some of the speed bumps seen in 2Q11 are receding from view but double-dip worries in the advanced economies are coming to fore, tempering the domestic growth momentum in 2H11. We maintain this year’s GDP growth estimate at 5.0%. We expect Bank Negara Malaysia (BNM) to hold the overnight policy rate (OPR) at 3.00% during its next policy meeting on 8 Sep as growth concerns outweigh inflation risks.

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