Malaysia records 4.5% economic growth
KUALA LUMPUR: Driven by private sector spending and the manufacturing and services sector, Malaysia’s economy grew 4.5% in the fourth quarter of 2016 – exceeding economists’ survey of 4.4%.
The nation’s central bank, Bank Negara Malaysia (BNM) said this was the strongest expansion compared to a 4.3% growth in the previous three months.
“On a quarter-on-quarter seasonally-adjusted basis, the economy recorded a sustained growth of 1.4%.” it said, adding that the 4.5% growth in the fourth quarter of 2016 and the 4.2% expansion in 2016 were within the range projected by the Treasury.
While the fourth quarter growth was supported by the continued expansion in private sector expenditure, on the supply side, BNM said growth continues to be driven by the manufacturing and services sectors.
“Domestic demand expanded at a more moderate pace, as the improvement in private consumption and investment activity was more than offset by the decline in public expenditure.
“Private consumption is anticipated to remain supported by wage and employment growth, with additional impetus coming from government measures to support disposable income of households,” said BNM.
On the external front, BNM said net exports contributed to grow as real exports expanded at a faster rate than real imports.
The central bank also pointed out that growth in the manufacturing, mining and agriculture sectors improved, while the manufacturing sector expanded at a faster pace owing to higher growth in domestic and export-oriented industries.
While there are indications of more sustained growth in the major industries in 2017, commodity prices remained volatile and downside risks to global growth continued to prevail.
“This is due to policy uncertainties and growth prospects of the major developed economies, heightened risk aversions in the global financial markets as well as geopolitical developments,” it said.
However, BNM said while the external environment remain challenging, the Malaysian economy will experience sustained growth with the primary driver being domestic demand.
BNM said that Malaysia’s current account surplus widened to RM12.2 billion (S$3.89 billion) in the fourth quarter, from RM6 billion in the third quarter.
“Private consumption is anticipated to remain supported by wage and employment growth, with additional impetus coming from announced government measures to support disposable income of households.
Also, the central bank said the Ringgit which had taken a beating over the past two years, began stabiling towards the end of the fourth quarter amid higher stability in the global financial markets.
“The depreciation was driven mainly by portfolio investment outflows from emerging economies amid uncertainties arising from the outcome of the US presidential elections,” it said.
On the manufacturing sector, BNM said it expanded at a faster pace at 4.8 per cent owing to higher growth in both domestic and export-oriented industries, while the mining sector recorded an improvement of 4.9 per cent due to the increase of natural gas production.
Growth in the services sector also continued to expand at 5.5 per cent, supported mainly by consumption-related services.
In the agriculture sector, economic activity contracted at a slower pace, reflecting the diminishing impact of El Niño on crude palm oil yields.