Slightly lower inflation in Q4

  • Economy
  • Thursday, 15 Feb 2018

Higher oil prices accounted for the rise in inflation

Higher oil prices accounted for the rise in inflation

PETALING JAYA: Malaysia’s headline inflation moderated slightly to 3.5% in the fourth quarter of 2017 (4Q17), as compared to 3.6% in the previous quarter.

Bank Negara attributed the marginally lower headline inflation to the slower pace of increase in the prices related to housing and transportation.

However, the full-year headline inflation in 2017 remains elevated at 3.7%, significantly higher than the 2.1% registered in 2016.

Meanwhile, the country’s external debt rose to RM883.4bil (US$215.5bil) or 65.3% of gross domestic product (GDP) as at end-Dec 2017 from the preceding quarter, driven by an increase in loans, interbank borrowing and non-resident holdings of domestic debt securities.

The debt amount in the fourth quarter increased from the RM873.8bil (US$204.7bil) or 64.6% of GDP at the end-Sept 2017.

According to the central bank, the higher external debt was partially offset by valuation effects following the strengthening of the ringgit against selected major and regional currencies during the fourth quarter.

“Malaysia’s external debt remains manageable given its currency and maturity profiles, as well as the availability of large external assets. More than one-third of total external debt is denominated in ringgit (34.3%), mainly in the form of non-resident holdings of domestic debt securities and in ringgit deposits in domestic banking institutions.

“As at end-Dec 2017, the offshore borrowing remained low at 37.5% of GDP compared to 60% of GDP during the Asian Financial Crisis,” stated Bank Negara in its quarterly bulletin.

On the country’s trade performance, the central bank said that gross export growth was lower but continued to register double-digit performance of 12.4%. This was largely driven by manufactured exports.

In comparison, gross export growth was higher at 22.1% in 3Q17.

“Gross import growth remained strong in 4Q17 at 14.4% on account of continued strength in intermediate imports and higher capital imports.

“The country’s trade surplus widened to RM27.7bil in the fourth quarter as compared to RM26.7bil in the previous quarter,” stated Bank Negara.

Malaysia’s current account surplus in 4Q17 widened slightly to RM12.9bil compared to RM12.5bil in 3Q17. This was due to a larger goods surplus and lower deficit in the secondary income account, which offset the higher deficits in the services and primary income accounts.

“For the full year, the current account surplus widened to RM40.3bil or 3.1% of gross national income, the highest since 2015,” it said.