KUALA LUMPUR: Malaysia's economy grew 7.6% in the first quarter of 2004 – faster than at any time during the past three years – helped by stronger demand for Malaysian exports like electronics, and higher spending by local consumers.
The growth rate, that exceeds the preceding quarter’s 6.6% gross domestic product (GDP) growth rate by a significant margin, puts the country on track to achieving the Government’s GDP growth target of between 6% and 6.5% this year.
The country’s economy grew by 4.6% in the first quarter of 2003 and achieved a growth rate of 5.3% for the full year.
Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz, in announcing the latest numbers from the Statistics Department yesterday, said the growth momentum would be sustained through this year, spurred by higher private sector investment and consumption, and continued healthy demand for Malaysian goods and services overseas.
During the first quarter, the manufacturing and service sectors, expanding by 12.5% and 6.2% respectively, were the key contributors to the strong GDP
performance. The mining sector gained 5.6% while the agriculture sector grew 3.2%. But the construction sector grew by only a marginal 0.6%.
Dr Zeti said the private sector was starting to lead the economy as disposable incomes rose and business conditions improved.
Private consumption grew 8.4% compared with the 5.9% in the corresponding period last year while the public sector contribution to growth moderated. As a result, the government’s fiscal deficit narrowed to 3.1% of GDP.
Gross foreign direct investment (FDI) inflows of RM3.4bil were also higher than in the corresponding period last year.
Looking ahead, Dr Zeti said the current high oil prices and possibly higher interest rates in the United States would have “limited impact” on the local economy this year.
In fact, she said, Malaysia’s GDP could grow even faster in the second quarter as historically, the country’s growth in the first quarter tends to trail in the second quarter.
The second half of this year however, could see slower growth compared with last year due to the high base in 2003, she added.
Dr Zeti also dismissed concerns that interest rates could be raised.
She said that with inflation still low (consumer price index grew 1% in the first four months in 2004) and domestic prices expected to remain subdued due to competitive pressures, Malaysian interest rates would also “remain low for some time to come”, she said.
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