Malaysia posts fastest quarterly growth in more than three years

Source: Xinhua| 2017-11-17 15:05:12|Editor: Yurou
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KUALA LUMPUR, Nov. 17 (Xinhua) -- Malaysia's economy grew 6.2 percent year-on-year in the third quarter, the strongest growth since the second quarter of 2014, the country's central bank said on Friday.

Private sector spending continued to be the main driver of growth, while the external sector also contributed positively to growth, as real exports expanded at a faster pace, Malaysian Central Bank's Governor Muhammad Ibrahim said in a briefing.

For the third quarter, domestic demand increased 6.6 percent year-on-year, supported by continued expansion in both private sector expenditure and public sector spending.

All economic sectors registered better growth rates, with manufacturing expanding at the highest rate of 7 percent, followed by services (6.6 percent) and construction (6.1 percent) sectors.

The exports surged 11.8 percent year-on-year in the third quarter, supported by higher demand from key trading partners in manufacturing products.

Given the continued strong performance in the quarter, the governor said the Malaysian economy was on track to register growth close to the upper range of the official projection of 5.2 percent to 5.7 percent in 2017.

"Domestic demand is expected to support this expansion. On the external front, exports will continue to benefit from the favorable global demand conditions," Ibrahim said.

Although the United States may further raise its interest rate soon, he believed the better growth rate has added flexibility for Malaysia to normalize its interest rates, which is currently at 3 percent.

The rate hike will depend on the outlook of Malaysia's inflation and economic growth, he said, adding he expected the inflation to be in a higher range of 3 percent to 4 percent in 2017 amid rising global oil prices.

Following the results, Socio-Economic Research Centre (SERC) executive director Lee Heng Guie revised up the growth forecast to 5.8 percent in 2017 from 5.5 percent previously, marking the strongest yearly growth in three years.

"Robust domestic demand, continued upbeat exports as well as supportive fiscal and monetary accommodation delivered another quarter of superb growth," he explained.

However, the pace of GDP growth will normalize to 5.1 percent next year, partly due to technical high base effect, he said.

"We are revising our full-year GDP growth estimate to 5.7 percent for 2017, while keeping our 5 percent growth forecast for 2018," United Overseas Bank (Malaysia)'s economist Julia Goh said.