Services, manufacturing underpin 2Q GDP growth

The construction sector expanded by 40.3%, rebounding from a decrease of 10.4% due to higher specialised construction activities (58.1%) and civil engineering (50%).

KUALA LUMPUR: Malaysia’s economic expansion of a higher-than-expected 16.1% in the second quarter (2Q, 2021) was underpinned by the services and manufacturing sectors, the Statistics Department said on Friday.

Chief Statistician Datuk Seri Dr Mohd Uzir Mahidin said the services expanded by 13.4%, manufacturing reported a growth of 26.6%, construction 40.3% and mining 13.9% but agriculture reported a decline of 1.5%.

“The economic performance in 2Q21 was supported by the continuous growth in manufacturing sector and the rebound of services sector on the supply side.

“On the demand side, the growth was influenced by the expansion in household consumption and favourable growth in net exports. Furthermore, fixed assets investment also rebounded in this quarter after recorded nine consecutive quarters of contraction,” he explained.

Chief statistician Datuk Seri Dr Mohd Uzir Mahidin

Mohd Uzir said the services sector which was the main contributor to the economy, grew 13.4% in 2Q21 compared to a decline of 2.3% in 1Q21.

The performance was driven by the wholesale and retail trade sub-sector which continued to expand at a stronger pace of 21% (1Q21: 1.2%) followed by the higher growth in finance & insurance (23.3%) and transportation & storage (37.2%) sub-sectors.

Information and communications sub-sector grew 5.9 per cent as against 6.3 per cent in the previous quarter.

However, on a quarter-on-quarter basis, the overall services sector declined 3.5% (1Q21: -4.8%).

He said manufacturing sector grew at a faster rate of 26.6% on-year (1Q21: 6.6%) but on a quarter-on-quarter basis this sector recorded a marginal decline of 0.1%.

Underpinning the growth of the manufacturing sector was petroleum, chemicals, rubber & plastics products (28%) and electrical, electronic & optical products (26.3%) which were also reflected in the strong growth in exports of goods recorded in 2Q.

Mohd Uzir said he construction sector expanded by 40.3%, rebounding from a decrease of 10.4% due to higher specialised construction activities (58.1%) and civil engineering (50%).

Nevertheless, the construction sector declined 8.8% from 1Q.

The mining & quarrying sector expanded 13.9% rebounding from a contraction (1Q21: -5.0%) due to improvement in the natural gas and crude oil & condensate sub-sectors.

However, on a quarter-on-quarter basis, it slipped by 0.5%.

The agriculture sector recorded a decline of 1.5% compared with a marginal growth of 0.2% in 1Q, mainly due to the decline in oil palm (-10.9%) sub-sector.

On the expenditure side, he said all components of expenditure registered positive growth in 2Q

anchored by private final consumption expenditure and gross fixed capital formation.

Private final consumption expenditure which contributed 55% of GDP in 2Q, increased 11.6% (1Q 21: -1.5%) attributed to the higher consumption in transport, food & non-alcoholic beverages and communication.

The exceptionally higher consumption of Transport was attributed to the higher purchase of motor vehicles in the first two months of the quarter by households compared to the same period of last year.

On a quarter-on-quarter basis, private final consumption expenditure declined 11.5%.

Gross fixed capital formation (GFCF) or investment on fixed assets rebounded by 16.5% (1Q, 21: -3.3%) after contracting for the past nine quarters.

The growth of GFCF was supported by a double-digit growth of structure and machinery & equipment in this quarter. The gradual improvement of GFCF can be seen as a catalyst for higher economic capacity to uplift the production of the future output.

However, GFCF shrank 2.7% from 1Q.

As for Malaysia’s trade, he said net exports soared 34.3% in 2Q from marginal growth of 0.8% in 1Q.

Exports and imports accelerated to 37.4% (1Q21: 11.9%) and 37.6% (1Q21: 13%) respectively.

“The performance in export was led by exports of goods which expanded 40.2% mainly in electric & electronics goods,” he said.

The government final consumption expenditure further expanded to 9% (1Q21: 5.9%) supported by higher spending on supplies and services attributed to the health-related expenditure in this quarter.