Affin Hwang Capital expects Malaysia’s real Gross Domestic Product (GDP) growth to recover from 4.1 per cent year-on-year (y-o-y) in the first half 2016 (1H16), to around 4.3 per cent in the second, bringing full-year growth to about 4.2 per cent.

In a research note today, it said growth would be supported by steady manufacturing activity in export-oriented industries like manufactured products, especially electronic and electrical products, as well as a recovery in commodity prices as palm oil, crude oil and liquefied natural gas.

Meanwhile, Malaysia's manufacturing Purchasing Managers’ Index (PMI) fell by 0.7 points to 47.4 in August versus 48.1 in July, the 17th consecutive month below the 50-threshold level, which averaged around 47.9 from April 2015 to August 2016, said Affin Hwang.

The weak PMI trends are consistent with other domestic economic indicators, where growth in Malaysia’s manufacturing sector slowed for the second quarter, from 4.5 per cent y-o-y in 1Q16 to 4.1 per cent in 2Q16, the slowest level since 2Q13.

"However, the slowdown was reflected in the output of domestic-oriented industries, rather than export-oriented industries, dragged down by lower production of vegetable & animal oil, fats & food processing (-4 per cent) as well as transport equipment (-6.2 per cent.