ECONOMIC GROWTH BEYOND EXPECTATIONS

TOTAL EXPORTS LAST YEAR ROSE 19PC TO RECORD RM935 BILLION GROWTH EXPECTED TO REMAIN FAVOURABLE THIS YEAR

THE economy grew 5.9 per cent last year, the highest in three years. This was supported by domestic demand, private sector spending and improved global trade, says Bank Negara.

MALAYSIA’S economy grew 5.9 per cent in the fourth quarter (Q4) of last year, supported by domestic demand, private sector spending and improved global trade, Bank Negara Malaysia (BNM) announced yesterday.

The Q4 gross domestic product (GDP) growth was slightly higher than economists expected, and brought the country’s overall GDP growth for last year to a three-year high of 5.9 per cent.

The Q4 growth was the second highest for last year, after the third quarter’s strong 6.2 per cent growth. The economy grew 5.6 per cent and 5.8 per cent in the first and second quarters of last year.

In a statement, BNM said Malaysia’s economic growth was expected to remain favourable this year, with domestic demand continuing to be the key driver of growth.

The government is forecasting growth of up to 5.5 per cent this year.

“The expected faster expansion in global growth would continue to benefit Malaysia’s exports, with positive spillovers to the domestic economic activity,” the central bank said.

All economic sectors continued to expand last year, except for the mining sector, BNM said.

Malaysia’s total exports rose almost 19 per cent to RM935.4 billion in 2017 — the strongest growth since 2005 and a record high — underpinned by exports of electrical and electronics, and major commodities.

Production in the export-oriented industries continued to expand last year as a result, while domestic-oriented industries showed lower growth due to a slower production of transport equipment and food-related products, as well as construction-related materials.

Growth in the construction sector was sustained by civil engineering activity for rail, highway, petrochemical and power plant projects.

The agriculture sector’s growth performance improved, reflecting mainly higher crude palm oil output as yields recovered from adverse weather conditions in the previous quarter.

Positive improvement was also seen in the finance and insurance sub-sector, supported by lower insurance claims and sustained banking activity. The information and communication sub-sector, meanwhile, was still supported by high demand for data communication and computer services.

In the mining sector, however, growth declined as natural gas output was affected by prescheduled facilities’ shutdown in Sarawak, BNM said.

The central bank said headline inflation moderated to 3.5 per cent in Q4 2017 mainly due to lower inflation in the housing, water, electricity and gas and transport categories. For 2017 as a whole, inflation averaged at 3.7 per cent.

“Domestic financial markets continued to experience low overall volatility amid improvement in market sentiments. Domestic financial institutions sustained sound asset quality and profitability levels,” BNM added.

Businesses and households demonstrated sound debt servicing capacity, and credit conditions in the domestic banking system remained conducive for economic activities with eligible borrowers having continued access to financing.

BNM said inflation was expected to moderate this year, reflecting a smaller contribution from global cost factors and a stronger ringgit compared with last year.

The ringgit has appreciated more than 2 per cent against the US dollar this year, among the best performers in Asia, after making its first annual gain last year since 2012.