The gross domestic product (GDP) growth during the quarter in review was supported by domestic demand amid the still weak external environment.
“The stronger growth in domestic demand in the second quarter of 2016 was attributed to both private consumption and private investment,” Bank Negara Malaysia governor Datuk Muhammad Ibrahim said at a press conference in conjunction with the release of the country’s GDP results.“This underscores the resilience of our economy,” he said.
On a quarter-on-quarter seasonally adjusted GDP for Q2 grew 0.7%, slower than the 1% in the first quarter. Also, the slower growth from the 4.9% expansion a year ago was due to a decline in the agriculture sector.
In Q2 2016, domestic demand grew 6.3% compared with 3.6% in Q1 2015, while net exports continued to decline at 7% compared with 12.4% previously.
On a cumulative basis, Malaysia’s GDP grew 4.1% in the first six months of 2016, compared with 5.3% in the corresponding period last year.
Despite the challenging economic environment, the Malaysian economy is expected to remain on the current growth trajectory of 4%-4.5% driven by domestic demand.
The Statistics Department said, in its Q2 2016 report said resilient growth in services and manufacturing coupled with a bullish momentum in construction have reaffirmed the performance of GDP on the production side.
“Nevertheless, the sluggish growth in agriculture sector has influenced the overall economic performance of this quarter,” it said.
For the first half of 2016, GDP grew 4.1% with a value of RM536.4bil at constant and RM589.5bil at current prices
The department said the services sector expanded to 5.7% from 5.1% the previous quarter. The wholesale & retail trade (6.6%) and information & communication (8.8%) remained as the key drivers of the services sector. This sector performance was further supported by business services which improved further to 7.9%.
The manufacturing sector grew at a slower pace of 4.1% (Q1 2016: 4.5%). The growth was supported by the electrical, electronic & optical products (8.8%) and petroleum, chemical, rubber & plastic products (5.5%).
The construction sector expanded faster to 8.8% (Q1 2016: 7.9%), underpinned by the civil engineering which registered growth of 18.9% and continued to support the construction sector. The residential buildings advanced to 9.2%, boosted by properties development.
The department said on the expenditure side, growth was driven mainly by private final consumption expenditure which rose at a faster pace of 6.3% (Q1 2016: 5.3%). This was driven by higher consumption on food & beverages, communication and transportation.
Gross fixed capital formation (GFCF) surged to 6.1% (Q1 2016: 0.1%) spurred by the growth of structure at 5.9% and the sharp rebound in machinery & equipment to 8.1%. Private sector with a share of 73.1%, posted a growth of 5.6% and has led the momentum of GFCF in this quarter. Meanwhile, Public sector accelerated to 7.5% (Q1 2016: -4.5%).
As for exports, they rebounded to 1.0% in Q2 2016, due to higher exports of goods and services. Imports recoreded a 2% growth to a recovery in imports of goods.