Published August 28, 2008
Q2 growth seen slowing to annual 5.9%

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(KUALA LUMPUR) Malaysia's economic growth probably slowed in the second quarter to an annual 5.9 per cent from 7.1 per cent in the first quarter as rising inflation hit domestic demand, a Reuters poll showed on Tuesday.
Weaker exports and higher inflation at the tail end of the quarter are expected to hurt the economy more in the second half with full-year growth seen at 5.3 per cent, the lowest since 2005, according to a survey of 14 economists.
'There was obviously some slowdown especially towards the end of the second quarter as witnessed by the IPI (industrial production index) and the start of a slowdown in consumer spending,' said Kit Wei Zheng, an economist at Citigroup.
Annual inflation in July leapt to 8.5 per cent, more than double the levels in April and May, after the government cut fuel subsidies in June and allowed petrol and diesel prices to rise sharply while food prices continued to rise.
'The slowdown in growth will be more pronounced in the second half due to the fuel price hike. We estimate it would have shaved as much as 0.7 to 1.0 percentage points off the year's GDP,' Mr Kit added.
As an indication of the fallout, independent think tank MIER said its consumer sentiment index for the second quarter fell to an all-time low after the fuel price rise. -- Reuters