KUALA LUMPUR: The economy expanded by 4.5% at in the first quarter of March 31, 2019 (Q1 2019), which was slightly above economists' forecast of 4.3%, underpinned by services and manufacturing.
However, GDP expanded at a slower pace compared with the fourth quarter of 2018 when it expanded by 4.7% and 5.3% in Q1 of 2018.
While Bank Negara governor Datuk Nor Shamsiah Mohd Yunus had on Thursday described the economic performance as "commendable", the first quarter gross domestic product (GDP) growth represents a sharp slowdown from the 5.3% economy expansion in 1Q18.
The recovery in the agriculture sector, in particular, crude palm oil production, continued expansion in private sector spending as well as high net exports were among the key economic growth drivers in the first quarter.
However, except for the agriculture sector, all other sectors recorded either a slower growth or a wider contraction.
The agriculture sector rebounded by 5.6% in 1Q19 from a growth of 3.1% in the previous corresponding quarter.
The services sector grew by 6.4% in 1Q19 as compared to 6.5% a year earlier. Manufacturing and construction sectors grew by 4.2% (1Q18: 5.2%) and 0.3% (1Q18: 4.9%).
The mining and quarrying sector contracted by 2.1% in 1Q19, as compared to a decline of 0.6% in 1Q18.
According to Nor Shamsiah, for the full-year 2019, GDP growth forecast is maintained between the range of 4.3% to 4.8%.
"Risks to the outlook remain tilted to the downside, mainly emanating from external sectors.
"However, Malaysia is expected to remain on a steady growth path," she told reporters during a press briefing on Thursday.
"Private sector demand is expected to remain the anchor of growth amid lower public sector spending. The external sector is likely to grow marginally in tandem with modest global demand. Overall, the baseline projection is for the Malaysian economy to grow between 4.3% and 4.8% for the year," she said.
The central bank has also announced six new measures in order to enhance market liquidity and accessibility.
Nor Shamsiah said this is partly to address the concerns of the global index provider, FTSE Russell in order to prevent a potential exclusion from the World Government Bond Index.
The six measures are:
1. Enhancements to repo market liquidity and flexibility.
2. Physical delivery for Malaysian Government Securities futures.
3. Expansion of dynamic hedging programme to include trust banks and global custodians.
4. Increased flexibility for dynamic hedging programme participants to manage foreign exchange risks.
5. Simplified foreign exchange transaction and documentation process.
6. Ringgit liquidity beyond local trading hours.
In the first quarter, the ringgit appreciated by 1.4% against the US dollar, driven mainly by non-resident portfolio inflows which amounted to RM13.5bil.
However, since April, the ringgit has depreciated by 2.2% against the US dollar (as at May 15), in line with most regional currencies.
"The recent depreciation pressure reflected cautious investor sentiments in global financial markets amid the weakening global growth outlook as well as uncertainties surrounding geopolitical and global trade developments," she said.