In line with the moderate growth pace of the global economy, the Malaysian economy grew 4.0 percent in the second quarter, leading to a 4.1 percent growth in the first half of 2016.

In a statement, Bank Negara Malaysia (BNM) said domestic demand was stronger during the quarter under review but growth was weighed down by the continued decline in net exports and a significant drawdown in stocks.

The country's gross domestic product (GDP) growth stood at 4.2 percent in Q1 and 4.9 percent in Q2 2015.

Meanwhile, private sector activity remained the key driver of growth, expanding at a faster pace of 6.1 percent in Q2 against 4.5 percent in Q1.

It said private consumption grew 6.3 percent against 5.3 percent in Q1, supported by continued wage and employment growth, as well as, the additional disposable income from government measures.

Private investment grew at a faster pace of 5.6 percent compared with 2.2 percent in Q1, driven mainly by continued capital spending in the services and manufacturing sectors.

As for public investment, the central bank said growth turned around to register a positive growth of 7.5 percent compared with -4.5 percent in Q1, on account of higher spending on fixed assets by both the Federal government and public corporations.

Growth of public consumption also improved in Q2 to 6.5 percent from 3.8 percent in Q1, due mainly to higher spending on supplies and services.

On the supply side, BNM said all economic sectors continued to expand, with the exception of the agriculture sector.

The higher growth in the services sector, up 5.7 percent from 5.1 percent in Q1, was underpinned primarily by stronger household spending.

The manufacturing sector was supported by the electronics and electrical cluster, growing 4.1 percent in Q2 against 4.5 percent in Q1.

It said growth in the construction sector was stronger, dominated by the civil engineering sub-sector.

Meanwhile, performance in the mining sector improved 2.6 percent against 0.3 percent in Q1, due mainly to higher crude oil and natural gas production.

However, growth in the agriculture sector declined 7.9 percent compared with a contraction of 3.8 percent in Q1, due to the lagged impact of El Niño on crude palm oil production.