Robust private sector spending in manufacturing and services sectors, and turnaround in agriculture lift economy
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.
PIC BY YAZIT RAZALI
Dr Yeah Kim Leng