Bangkok Post

Malaysia’s GDP growth accelerate­s

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KUALA LUMPUR: Malaysia’s economy expanded by a stronger-than-expected 5.9% in the last quarter of 2017, a likely boost for Prime Minister Najib Razak ahead of national elections that must be held by August.

The brisk pace of growth over the past four quarters may increase the chances that Najib, criticised over a corruption scandal at a state-owned fund and rising living costs, can fend off an election challenge from his former mentor Mahathir Mohamad.

The annual growth pace for October-December pushed 2017 full-year expansion to 5.9%, its best in three years and an accelerati­on from 2016’s 4.2%.

Bank Negara Malaysia (BNM) said domestic demand continued to drive growth i n October-December, with healthy expansion i n private consumptio­n supported by wage and employment gains.

“Growth is expected to remain favourable in 2018, with domestic demand continuing to be the key driver of growth,” the central bank said.

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

The median forecast of a Reuters poll was for fourth-quarter growth of 5.7%, from July-September’s 6.2% pace, the fastest in more than three years.

Alex Holmes, analyst at Capital Economics, predicted growth “will lose a little more steam over the course of this year,” adding that export expansion “is unlikely to be as strong as in 2017.’’

This year, Najib faces one of the toughest elections for his ruling coalition — in power since Malaysia became independen­t in 1957 — with former premier Mahathir leading an opposition campaign to oust him.

Najib, who denies any wrongdoing in the financial scandal, is expected to cite solid economic recovery as a reason for voters to keep him in power. He became Malaysia’s leader in 2009.

BNM said its monetary policy “remains accommodat­ive”, and that its decision to hike its key rate by 25 basis points to 3.25% in January “reflects a normalisat­ion, and not a tightening of monetary conditions”.

The rate hike was the first since July 2014.

Brian Tan, a Singapore-based economist with Nomura Securities said a second rate hike “is unlikely this year unless data points to growth exceeding the government’s 2018 forecast of 5.0 to 5.5%.’’

“If we get another year of out-performanc­e, then a rate hike could come back into the picture,” he said.

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