Malaysia records 4.2 pct growth in first quarter 2016
Pritha Manivannan
May 13, 2016 15:36 MYT
May 13, 2016 15:36 MYT
Malaysia's economy is projected to grow more steadily in the second half of 2016 following reduced impacts of the GST and lapse of price adjustment, among other factors.
Malaysia's economy grew moderately at 4.2 percent in the first quarter this year compared to 5.7 percent during the same period last year.
Bank Negara Malaysia (BNM) Governor Datuk Muhammad Ibrahim said the slower growth was driven by external factors and cautious private consumption.
However, he was optimistic for the second half of 2016, predicting a stronger growth following reducing impacts from the Goods and Services Tax (GST) and lapse of price adjustment.
"The first half of this year, we expect to be slower than the first half of last year. However, we expect the second half to improve, so we will be able to achieve four to 4.5 percent growth.
"Our data shows that we are on track. It is quite important for us not to forget that Malaysia is an open economy and the global growth will have impact on us. We are not immune to it," Muhammad said.
On a sectoral basis, the services sector grew 5.1 percent in the first quarter while manufacturing grew 4.5 percent.
Agriculture, however, experience a decline of 3.8 percent with lower palm oil output due to El Nino.
Private consumption expanded 5.3 percent in the first quarter supported by wage growth and favourable labour market conditions.
Looking at the ringgit, Muhammad said it improved 5.9 percent in the first quarter.
"The ringgit reflects the fundamentals in a long term. We have strong fundamentals.
"Our foreign reserves are quite high. Our financial system is diversified. Growth and lending is positive. At the same time, the inflation rate is manageable.
"So ringgit will show a lot of noise but in the long run it will be stable and will reflect the fundamentals," Muhammad said after presenting the first quarter results today.
On inflation, Muhammad said the first quarter has shown an increase of 3.4 percent following the elimination of the electricity tariff rebate in January.
Household and business loan performance remained of high quality recording a positive growth of 7.6 percent with a total of RM262 billion.