6.2pc STELLAR EXPANSION
The numbers look good, especially the export sector, says BNM governor
nation’s economy grows at its fastest pace in three years, underpinned by robust exports and private sector spending. The central bank governor says full-year growth is likely to be in the upper range of the official projection of 5.2 to 5.7 per cent, but 'it will be a pleasant surprise’ if this is exceeded.
THE Malaysian economy continued to surge in the third quarter, recording 6.2 per cent growth, which marks the strongest growth pace in three years.
Bank Negara Malaysia governor Tan Sri Muhammad Ibrahim said the economy was on track to register growth that was close to the upper range of the official projection of 5.2 to 5.7 per cent for this year.
“So far, this year, the numbers look good especially the export sector, which has been showing a double-digit growth,” he said at a media briefing yesterday to announce the latest growth data.
While it may be too early to tell, Muhammad said it was possible to exceed the 5.7 per cent growth and that would be a pleasant surprise, but Malaysia had to watch out for external risks.
The first three quarters, from January until September, recorded an average of 5.9 per cent year-on-year growth (5.6 per cent in the first quarter and 5.8 per cent in the second quarter).
Beating market expectations, the economy’s stellar growth number came on the back of robust private sector spending and continued strength in exports.
Malaysia also joined the ranks of other countries in the region namely Singapore, the Philippines and Indonesia, which recorded solid growth in the third quarter.
Growth prospects continue to be supported by new and ongoing implementation of infrastructure projects and improvement in growth of Malaysia’s key trading partners.
The robust growth in the third quarter stemmed from expansion across all economic sectors, Bank Negara said.
On the supply side, the services and manufacturing sectors remained the key drivers of growth.
As to the feel-good factor not finding its way to low-income Malaysians, Muhammad responded: “We need to look at totality — at the economic policy which created better-paying jobs, industries that can generate high value added, as well as relook our education policy, to train our people to be more productive.”
IHS Markit forecasts that the Malaysian economy will continue to grow strongly over the medium term, at a pace of 6.2 per cent per year in the 2018-2020 period.
Rajiv Biswas, who is Asia Pacific chief economist for IHS Markit, said the medium-term outlook for the Malaysian economy remains strong, underpinned by strong underlying consumption expenditure.
“It is also supported by the buoyant growth in manufacturing exports, as well as strong growth in construction related to megaprojects such as the Petronas RAPID petrochemicals project and transport infrastructure projects such as the PanBorneo Highway, MRT Line 2, MRT Line 3 and the East Coast Rail Link.”
Rating agency RAM Holdings is impressed with the strong growth and is keeping a close watch on core inflation, which has been rising of late.
It expects headline inflation, as measured by the Consumer Price Index, to moderate to 2.5 per cent next year from the projected 3.8 per cent this year due to the dissipating effects of fuel prices.
Muhammad expects the CPI to record the upper range of the three-to-four per cent projection, depending on oil prices.