Bank Negara Governor Datuk Muhammad Ibrahim at the press conference after presenting the Bank Negara Malaysia First 2017 GDP.
KUALA LUMPUR: Consumer spending, business expansion and rising exports helped push Malaysia’s economic growth to its fastest pace in two years in the first quarter which ended March 31.
Gross domestic product (GDP), a measurement of all the goods and services produced at a given period in a country’s economy, expanded by 5.6% to RM280.1bil in the first quarter compared to the same quarter a year ago. Compared to the fourth quarter of 2016, the economy grew by 1.8%.
Bank Negara Governor Datuk Muhammad Ibrahim expects growth to be sustained based on the central bank’s projections for the economy to grow between 4.3% and 4.8% this year.
“What we’ve seen over the past three months is strong growth in private investments and exports. If these two components show strong numbers, we’ll be seeing growth at the higher end of our projections,” he told a media briefing yesterday.
Muhammad said inflation will hover at around 3% to 4% this year but cautioned there were still uncertainties on the global front.
Headline inflation, which includes more volatile food and fuel prices, rose 4.3% on average in the first three months of the year.
Muhammad noted that inflation has so far been cost-driven rather than demand-driven.
The expansion of the economy was far above the 4.8% median expectations of economists polled before Bank Negara released the GDP data. Most economists expected exports to support growth in the quarter but did not expect the pace of growth fast.
Most would likely revise the forecast for economic growth higher given the unexpected growth spurt in the first quarter.
Citigroup Inc senior economist Kit Wei Zheng revised GDP to 5.2% from 4.5% previously.
“Whilst we had anticipated the strength of exports and consumption, the main upside surprise came from investments and foreign direct investments, helped by a competitive ringgit, stronger external demand and tightening capacity,” he said in a report.
Malaysia’s growth compares favourably in the region, with Thai GDP for the same quarter at 3.3%, Indonesia at 5.01%, Singapore at 2.5% and the Philippines at 6.4%.
Private consumption grew by 6.6%, mainly from food and non-alcoholic beverages, communication, housing and utilities. Private investments rose 12.9%, led by investments in machinery and equipment, while Government consumption rose by 7.5%. Exports gained 9.8% in the quarter.
The economy’s expansion was broadbased, with all sectors registering growth.
The agriculture sector saw a dramatic swing after contracting in the fourth quarter of 2016 to post growth of 8.3%, largely due to recovery of crude palm oil yields and higher rubber production.
The manufacturing sector’s performance reflected growth in exports and consumer-related production, while broadbased improvements were seen across the services sector.
On Twitter and Facebook, Prime Minister Datuk Seri Najib Tun Razak said the growth was due to the strong fundamentals laid by the Government.
“Nevertheless, we will not be complacent but continue to work to ensure that our economy continues to grow from time to time,” he said.
Malaysian Associated Indian Chambers of Commerce and Industry president Tan Sri K. Kenneth Eswaran said the Indian business community lauded the Government’s Economic Transformation Programmes that contributed to the higher growth.
“The Government’s initiatives ensured that we were able to maintain our progress during challenging times,” he added.