KUALA LUMPUR: Malaysia’s economy grew at a better-than-expected 5.6 percent the first quarter, easily beating expectations, as buoyant exports and solid domestic demand produced the fastest growth in two years.
January-March growth announced by the central bank on Friday, was well above a Reuters poll forecast of 4.8 percent and the previous quarter’s 4.5 percent expansion.
“We expect growth to be sustained,” Bank Negara Malaysia (BNM) Governor Muhammad Ibrahim told at a news conference. He said the central bank was keeping its full-year growth forecast at 4.3-4.8 percent. In the first quarter, he said, it saw “strong growth in private investments and exports”.
March exports surged 24.1 percent from a year earlier in ringgit terms, and those in February 26.5 percent. But the current account surplus, which has generally been decreasing, narrowed in the first quarter to 5.3 billion ringgit from 12.5 billion ringgit in 2016’s last period, due to lower goods surplus and larger services deficit.
“A recovery in commodity prices should help bolster the current account surplus in the coming quarters, though the surplus is still likely to remain low by past standards,” Capital Economics said in a note. Portfolio investments saw a big net outflow of 31.9 billion ringgit, compared to a 19.1 billion outflow in the fourth quarter.
Capital outflows hit a record in November-January, when foreign investors divested holdings of government bonds to the tune of 27.9 billion ringgit ($6.46 billion).
In early 2016, tepid demand for Malaysia’s oil and other commodity exports pulled full-year growth down to 4.2 percent, the lowest since contraction in 2009, from 5.0 percent in 2015.
