Ro­bust pri­vate sec­tor spend­ing in man­u­fac­tur­ing and ser­vices sec­tors, and turn­around in agri­cul­ture lift econ­omy

New Straits Times - - Front Page - RUPA DAMODARAN news@nst.com.my

MALAYSIA’S econ­omy surged strongly in the first three months of the year, reg­is­ter­ing a 5.6 per cent growth. Bank Ne­gara Malaysia gover­nor says the econ­omy is 'on the right track' to grow be­tween 4.3 and 4.8 per cent by the end of the year. The 5.6 per cent growth in the first quar­ter is the fastest in two years and the strong­est since the Goods and Ser­vices Tax was in­tro­duced. Re­search houses re­acted by re­vis­ing their growth fore­casts for the year up­wards.

THE Malaysian econ­omy pow­ered strongly in the first three months of the year, post­ing a 5.6 per cent growth — the best quar­ter growth in two years.

Bank Ne­gara Malaysia Gover­nor Datuk Muham­mad Ibrahim said the growth was lifted by stronger pri­vate sec­tor spend­ing in the man­u­fac­tur­ing and ser­vices sec­tors.

The stel­lar per­for­mance, which had placed Malaysia above oth­ers in the re­gion, was also due to the turn­around in the agri­cul­ture sec­tor.

“We are on the right track as we move for- ward and for the econ- omy to grow by be­tween 4.3 and 4.8 per cent by the end of the year,” he said at a me­dia brief­ing on the first quar­ter gross do­mes­tic prod­uct re­sults yes­ter­day.

Do­mes­tic de­mand was pro­jected to ex­pand, while ex­ports were ex­pected to ben­e­fit from the im­prove­ment in global growth.

At 5.6 per cent in the first quar­ter, the growth pace was the fastest in two years, and the strong­est since the Goods and Ser­vices Tax (GST) was in­tro­duced.

Econ­o­mists said the re­sults marked a good start to the year and many re­search houses had re­vised their growth fore­casts up­wards for this year.

Economist Dr Yeah Kim Leng said one pos­i­tive trend was that all sec­tors reg­is­tered pos­i­tive growth, with stel­lar per­for­mance in the agri­cul­ture sec­tor.

The value of crude palm oil (CPO) ex­ports, for in­stance, rose by RM3.31 bil­lion, or 37 per cent, to RM12.25 bil­lion dur­ing the first quar­ter of the year due to higher palm oil price.

Mar­ket an­a­lysts ex­pected CPO prices to re­main high amid tight sup­ply and grow­ing de­mand from key mar­kets like China.

On con­cerns of the cur­rent neg­a­tive in­ter­est rate sce­nario in Malaysia due to the gap be­tween the head­line in­fla­tion level ver­sus the bench­mark in­ter­est rate, Muham­mad ex­plained that the sce­nario had oc­curred eight times in Malaysia in the past, but al­ways for a short pe­riod.

“While in­fla­tion in­creased in the first quar­ter, it is ex­pected to mod­er­ate from the sec­ond quar­ter on­wards.”

On the ring­git, he said it had strength­ened due to the mea­sures an­nounced in De­cem­ber and March.

“The level now re­flects the strength of the ring­git vis-à-vis the strength of the econ­omy. As we move for­ward, it will con­tinue to re­flect the (strength­en­ing) econ­omy.”

Fur­ther mea­sures would be in­tro­duced after dis­cus­sions with fi­nan­cial mar­ket play­ers.

He also cau­tioned the property mar­ket to check on the de­vel­op­ment of high-rise con­do­mini­ums, shop­ping malls and of­fice space, say­ing any over-sup­ply would have far reach­ing im­pli­ca­tions on the sec­tor and the econ­omy.

On property de­vel­op­ments, he said there was a strong de­mand for credit for af­ford­able houses, es­pe­cially from first-time house­buy­ers.

Con­sumers, he warned, must be aware of their fi­nan­cial obli­ga­tions and shop around for the best prices when plan­ning to buy a house.

“Com­pe­ti­tion for hous­ing end­fi­nanc­ing fa­cil­i­ties is steep in Malaysia. It has driven end-fi­nanc­ing price for house­buy­ers, so they must take it se­ri­ously.”

The cen­tral bank chief also re­minded the pub­lic that there would be no time ex­ten­sion on its di­rec­tive for all lo­cally-is­sued credit cards to be re­placed with those re­quir­ing per­sonal iden­ti­fi­ca­tion num­bers to per­form trans­ac­tions by July 1.

Bank Ne­gara Malaysia Gover­nor Datuk Muham­mad Ibrahim an­nounc­ing the first quar­ter gross do­mes­tic prod­uct re­sults in Kuala Lumpur yes­ter­day.


Dr Yeah Kim Leng

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