KUALA LUMPUR: Malaysia’s gross domestic product (GDP) grew by 5.2% last year — beating most analysts’ expectations — on the back of higher consumer spending, soaring exports and stronger growth in investments.
According to Bank Negara, the fourth quarter (Q4) was particularly strong, rising by 6.4% — the highest quarterly growth in three years. The economy grew by 4.1% in 2002.
Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said all sectors of the economy showed positive growth, with manufacturing leading the way with a 12% expansion.
“The Malaysian economy has entered 2004 on a stronger overall growth performance,” she said, adding that the outlook for the global economy had improved significantly with growth becoming more broad-based.
“External demand is therefore expected to be sustained in an external environment of stronger growth in the major industrial economies and higher growth in the Asian region,” she added.
Based on stellar financial results being announced by listed companies, analysts were expecting good Q4 numbers but they were nonetheless surprised with the strength of the economy.
“It’s a very good number and is much higher than even the most optimistic projection,” said Affin-UOB Sdn Bhd’s economist Suhaimi Illias.
While improving global and regional economies had lifted export growth, the economy also got a lift from household spending and government consumption.
The performance of the economy in Q4 was also in part due to a buoyant stock market since May last year. There was also the economic stimulus package by the Government to counter the effects of the Iraq war and SARS.
Low interest rates and readily available financing, together with high commodity prices, had a positive effect on consumer spending.
“Consumer spending will continue to be the dominant factor driving the economy.
However, private investment is expected to pick up,” CIMB Securities economist Lee Heng Guie said.
Zeti, who did not reveal whether the Government would raise its official 2004 growth forecast of 5.5%-6%, said private sector activity was expected to sustain economic growth momentum and allow the Government to slowly ease off its economic stimulus measures.
She said the outlook for private investment showed an up-cycle while stronger loans applications and higher investment approvals, particularly in the manufacturing sector, pointed to expanded business activity going forward.
“The combined effects of an improved external environment and the indications of strong domestic activity in Malaysia significantly improves our growth prospects for 2004,” she added.