Sabah’s gas, oil boost the GDP
Published on: Thursday, August 15, 2019
By: David Thien
KOTA KINABALU: Production from natural gas fields mostly off East Malaysia and the East Coast of West Malaysia is boosting the country’s GDP into the second quarter of 2019.
Stronger mining output came mainly from higher natural gas production which rose 13pc year-on-year in June, 2019, being the end point of the first quarter of 2019 (+7.6pc year-on-year in May).
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This compensated for the poor output in crude oil which dropped -3.7pc year-on-year in June, (-2pc year-on-year in May).
Natural gas output has been in the positive since March while mining crude oil production has been in the negative growth trajectory since January 2019.
Although mining output grew strongly by 4.6pc year-on-year in June supported by natural gas output that compensate for the poor crude oil output, the slower gains from manufacturing, up 3.8pc year-on-year, and electricity, up 1.7pc year-on-year resulted in the slower overall gain in industrial production.
Industrial production rose 3.9pc year-on-year in June, slightly slower than May’s 4.0pc year-on-year, and below market consensus of 4.1 per cent year-on-year.
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The manufacturing performance was in tandem with the manufacturing Purchasing Managers’ Index (PMI) that showed a slower manufacturing output which registered 47.8 in June, down from 48.8 in May.
Looking at manufacturing output based on industrial production, domestic activities that reported slower growth in June are: (1) transport equipment which rose 5.6pc year-on-year (+6.9pc year-on-year in May); (2) petroleum, chemical, rubber& plastic up 3.0pc year-on-year (+3.2pc year-on-year in May); and (3) electric and electronic products climbed 3.5pc year-on-year (3.7pc year-on-year in May) in line with the global semiconductor net billings which fell 17.7 per cent year-on-year in June from -14.6pc year-on-year in May, 2019.
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A reading below 50 suggests contraction while above 50 is an expansion, as reported by Ambank Research headed by Dr Anthony Dass.
“The manufacturing Purchasing Managers’ Index survey result that showed production index falling for a second month in succession but the average for the second quarter of 2019 of 48.7 was above that seen in the first quarter of 2019 of 47.6.”
“Likewise, both exports and imports in the second quarter of 2019 on average grew by 0.2pc and -1.2pc compared with -0.7pc and -2.5pc in the first quarter of 2019.”
“Thus, underpinned by better second quarter data reported by key economic indicators like industrial production,
manufacturing Purchasing Managers’ Index, exports and imports, this shows that the second quarter of 2019 GDP growth will be much stronger, estimated to be around 4.7 to 5.0pc from the first quarter of 2019 GDP achievement of 4.5pc,” he said.
On Singapore, Dr Anthony said that the island republic risks going into technical recession.
He said that Singapore is often held up as a bellwether for global demand given its heavy reliance on foreign trade.
“The Singapore government cut its forecast range to zero to 1pc from its previous estimate for 1.5pc to 2.5pc for 2019.
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