KUALA LUMPUR: Malaysia’s economy expanded 4.3 per cent in the third quarter, the fastest quarterly growth so far this year, Bank Negara Malaysia announced yesterday. The central bank attributed the stronger growth to continued private sector spending, support from net exports and growth in major economic sectors.
The economy grew 4.2 and 4.0 per cent in the first and second quarters of this year, respectively. Third-quarter growth last year was 4.7 per cent. Bank Negara Malaysia governor Datuk Muhammad Ibrahim said growth was seen in major economic sectors such as services, manufacturing, construction, mining and agriculture, which was in line with domestic demand. “The domestic demand grew at a more moderate pace and the sustained growth in private sector activity was more than offset by the slower growth in public spending.
“Private consumption grew 6.4 per cent compared with 6.3 per cent in the previous quarter on continued wage and employment growth and minimum wage increase effective July 1. “Private investment registered a growth of 4.7 per cent in the third quarter, compared with 5.6 per cent (in the previous quarter), supported by continued capital spending in the services and manufacturing sectors,” said Muhammad at a briefing on the third-quarter gross domestic product (GDP), here, yesterday. He said Malaysia was expected to expand by 4.0 to 4.5 per cent this year, with domestic demand, particularly private sector activity, continuing to be the key growth driver.
Private consumption is expected to remain supported by wage and employment growth, with additional impetus coming from announced government measures to increase disposable income. “Investment activity will continue to be anchored by the ongoing implementation of infrastructure projects and capital spending in the manufacturing and services sectors. “On the external front, export growth is expected to remain weak following subdued demand from Malaysia’s key trading partners. “Overall, while domestic conditions remain resilient, uncertainties in the external environment may pose downside risks to Malaysia’s growth prospects,” he added.
Muhammad said Malaysia’s financial system remained resilient. “While businesses and households continue to adjust to the more challenging operating conditions and higher cost of living, these adjustments are expected to have modest impact on financial institutions’ earnings and asset quality. “Going forward, external events will continue to weigh heavily on investor sentiments and volatility in the domestic financial markets. These include increased uncertainty over policy adjustments and growth in the major economies, volatile commodity prices and developments in the United Kingdom post the European Union referendum.
“The domestic financial system stability is nonetheless expected to be maintained,” he said. Inflation moderated further to 1.3 per cent in the third quarter compared with 1.9 per cent in the previous quarter. “Financial institutions were well-capitalised with combined capital buffers of RM160.8 billion and for banks, more than 90 per cent of total capital consists of retained earnings, paid-up capital and reserves which have strong loss-absorbing quality. “The current account surplus of the balance of payments widened due mainly to a larger goods surplus, which more than offset the higher deficit in the services and investment income accounts.
