Weak mining exports, slowing agriculture output and the ongoing slump in commodity prices will likely drag Malaysia’s fourth-quarter economic growth to its slowest in nearly three years.

Malaysia’s fortunes have turned along with the collapse in global crude prices last year and the continuing slowdown in China, its biggest trading partner.

A financial scandal threatening to unseat Prime Minister Najib Abdul Razak has also weighed on its currency, the ringgit, which was Asia’s worst performer last year.

Annual growth was forecast at 4.3 percent for the October-December quarter, according to the median estimate in a Reuters poll, its slowest since the first quarter of 2013 when it grew at the same pace. The economy expanded 4.7 percent in the third quarter.

Growth has been shrinking over the course of 2015 and has been largely propped up by the manufacturing sector while weak global demand has hit the country’s exports of commodities such as palm oil and liquefied natural gas. Exports in December grew only 1.4 percent from a year earlier, down from 6.3 percent in November.

“Ultimately we’re going to see resilient manufacturing activity which will offset agriculture and mining figures that have been in the negative,” said Brian Tan, an analyst with market research firm Nomura.

Malaysia’s economy and currency have recently found some respite after a tough 2015, as foreign capital returned to ringgit bond markets.

Uncertainty from the scandal surrounding state fund 1Malaysia Development Berhad (1MDB) has weighed on Southeast Asia’s third-largest economy, but political risks have partly eased after Malaysia’s attorney-general cleared the prime minister of any criminal offences or corruption.

The case, however, remains far from over with Swiss and Singaporean authorities pursuing two separate probes on money laundering and corruption linked to 1MDB.

Domestic slowdown

Private consumption is expected to remain slack in the wake of a six percent Goods and Services Tax implemented last April.

“Sentiments are too low. Worries of cost of living are still prevalent, causing people to hold back on spending,” said Mohd Afzanizam Abdul Rashid, chief economist at Bank Islam.

Malaysia cut its 2016 Budget late last month to save up to RM9 billion (US$2.17 billion) after oil prices fell below US$35 a barrel, far off the government’s estimated average of US$48 a barrel for Brent crude.

Najib maintained incentives for farmers and tax breaks for families and announced a three percent cut in employee contributions to the private sector pension fund, in a bid to put more cash in the hands of consumers.

Economists polled expect 2015 full-year GDP to come in at 4.9 percent, within the government’s and central bank’s projection of between 4.5 and 5.5 percent but down from six percent in 2014.

- Reuters