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Malaysia’s gross domestic product edged out expectations by a hair in the quarter ended December, continuing a rebound in growth from a seven-year nadir hit during the second quarter.

GDP in the fourth quarter rose 4.5 per cent year on year, according to figures released by Malaysia’s Department of Statistics. That just barely bested a median estimate of 4.4 per cent from economists surveyed by Bloomberg.

The 0.2 percentage point uptick pushed quarterly growth further above a seven-year low hit in the second quarter and brought annual GDP growth to 4.2 per cent, down from 5 per cent in 2015. Quarter-on-quarter growth stood unchanged from a downwardly-revised 1.4 per cent growth in Q3 (previously 1.5 per cent).

Growth in manufacturing, which accounted for almost a quarter of GDP in the final three months of 2016, accelerated to 4.8 per cent year on year, while services, which contributed almost 55 per cent to the top-line growth figure, moderated to 5.5 per cent. Those rates had come in at 4.2 and 6.1 per cent in the third quarter.

After shrinking 1.3 per cent in Q3 exports staged a rebound with a rise of 1.3 per cent last quarter, while imports also bounced back from a drop of 2.3 per cent to end Q4 with a 0.7 per cent rise and imports dropped by 2.3 per cent.

The recovery in economic activity, while welcome, does not mean Malaysia is out of the woods just yet.

The country’s household debt to GDP ratio was 89 per cent in 2015, meaning families will likely have to pay off more of what they owe in the coming year with earnings that might otherwise have gone toward bolstering domestic demand via spending on goods and services.

HSBC recently estimated Malaysia’s consumer spending growth would slip from 5.6 per cent last year to 3.7 per cent in 2017, placing it in the bottom half of Asean economies.

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