Malaysia's 3Q GDP growth seen slowing to 4.4%

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KUALA LUMPUR (Nov 13): Malaysia's economic growth likely slowed in the third quarter as sluggish demand at home and abroad began to drag on activity after a solid first half, a Reuters poll showed.

The median forecast from the poll of 14 economists was for growth of 4.4% in July-September compared with a year earlier, slowing from 4.9% in the second quarter and 4.5% expansion in January-March.

Individual forecasts ranged from 4.1% to 4.7%.

Malaysia was the only Southeast Asian nation to report an acceleration in growth in the April-June period from the previous quarter, as the region grappled with softening global demand and the escalating US-China trade war.

But weaker exports and domestic consumption started to drag on Southeast Asia's third-largest economy in the last few months, according to economic research consultancy Capital Economics.

"The Malaysian economy has outperformed the rest of the region for most of this year but recent data suggest that it is coming to an end," the firm said in a research note on Friday.

"The latest activity data have been poor... Our GDP Tracker, which is based on this monthly data, points to a fairly sharp slowdown in 3Q," said Capital Economics, which sees 3Q growth at 4.2%.

Malaysia's exports fell 6.8% in September, the biggest decline in nearly three years and widening from a 0.8% contraction the previous month.

Factory output grew 1.7% in September, performing below expectations for a fourth straight month.

Domestic consumption has also cooled. Wholesale and retail activities grew 5.7% annually in the third quarter, down from 6.1% pace over April-June, according to data from the Malaysian Department of Statistics.

"High frequency indicators like business sentiment, consumer sentiment and motor vehicle sales slowed during the quarter indicating subdued domestic demand," HSBC said in a note.

Malaysia's central bank made a preemptive cut to its key interest rate in May in a bid to boost growth, but has since stood pat as it expects private spending to remain resilient and sufficient to offset pressure from weaker exports.