Domestic demand slows in 4Q, major sectors expanded

KUALA LUMPUR: Malaysia’s domestic demand saw slower expansion in the fourth quarter ended Dec 31, 2018 (4Q 2018), but on the supply side, major sectors continued to expand, with growth in the commodity-related sectors registering improvement.

In the 4Q18 Quarterly Bulletin released yesterday, Bank Negara Malaysia (BNM) said domestic demand slowed to 5.6 per cent for 4Q 2018, down from 6.9 per cent in 3Q 2018, mainly weighed down by a moderation in gross fixed capital formation, which expanded marginally by 0.3 per cent from 3.2 per cent in the previous quarter.

“Private consumption growth remained robust at 8.5 per cent in 4Q 2018 from nine per cent in 3Q 2018, despite the front-loading of purchases during the tax holiday period in the previous quarter,” it said, adding that income and employment growth continued to drive household spending.

The central bank also noted that the government measures to alleviate cost of living, such as special payments to civil servants and pensioners, also provided some support to consumer spending.

On public consumption, it expanded at a slower pace of four per cent in 4Q 2018 from 5.2 per cent in the previous quarter, attributed by a more moderate growth in supplies and services.

In terms of investments, the BNM said private investment growth moderated to 4.4 per cent in 4Q 2018 from 6.9 per cent in 3Q 2018, due to a slower capital spending across major economic sectors.

“However, ongoing multi-year projects, particularly in the manufacturing sector continued to provide support to overall growth,” it said.

On public investment, the BNM said it contracted 5.5 per cent during the quarter from a contraction of 4.9 in 3Q 2018, mainly due to a decline in capital spending by public corporations.

On the supply side, the central bank said growth in the manufacturing sector remained driven by continued strength in the electronics and electrical (E&E) and transport-related production. — Bernama