Malaysia's
economy up 5.4% in Q2, manufacturing, demand support growth
KUALA LUMPUR: Malaysia's economic growth, as measured by gross
domestic product (GDP), for the second quarter ended June 30 rose by an
unexpected 5.4% year-on-year, underpinned by an expansion in manufacturing and
robust domestic demand.
GDP growth for the first quarter was revised to 4.9% from 4.7%,
while growth for the first half of the year stood at 5.1% compared with the
same period a year ago. Compared with the first quarter, GDP expanded by 3%.
In the supply side of the economy, only the agricultural sector saw
a contraction due to lower crude palm oil production. Manufacturing, services,
construction and mining all posted growth. Domestic demand jumped 13.8% for the
quarter and rose 11.8% for the first-half.
The country's second-quarter GDP numbers came as a surprise to many
economists, whose median forecast was for a 4.6% expansion. Growth for the
quarter even exceeded the most optimistic forecast of 5.2%.
Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said at
a briefing following the release of the GDP data that the surge in private
investment was the most encouraging aspect of the economy.
“Private investment has made a strong return because the
investment climate has improved tremendously, with Malaysia moving up the
rankings of various surveys in terms of competitiveness, costs and ease of
doing business,” she said.
Zeti said the improvement was underscored by the higher
implementation of investments by domestic and foreign investors. She added that
civil engineering projects in the oil and gas, transport, utilities and
services industries had helped spur growth in the construction sector.
By numbers, investments from the public and private sectors jumped
26.1% year-on-year for the quarter under review, with the first half rising
21.3%.
By sector, private investments rose 24.6% while public investments
surged 28.9%. For the first half, private sector investments grew 22.4% while
public sector investments expanded 19.5%.
Consumption rose 8.9% for the quarter and 11.8% in the first half.
By sector, private consumption increased 8.8% for the quarter and 8.1% for the
first half while public consumption expanded 9.4% for the quarter and 8.4% in
the first half.
Zeti said monetary policy continued to be supportive of growth and
that for the rest of the year, risks weighed on growth rather than on inflation
with external headwinds still overshadowing the outlook.
She said it would take time for the global economy to recover and
this would need action from various stakeholders.
“At this point, we're maintaining our forecast of 4% to 5% GDP
growth for the year but this may change when the budget is announced (on Sept
28). This will come in at the upper range of the forecast if growth is robust,”
Zeti added.
Alliance Investment Bank Bhd chief
economist Manokaran Mottain has revised GDP growth for the year to 4.7% from
4.5% previously, with the second half to record growth of 4.5%.
He told StarBiz the third quarter would see expansion at its
slowest.
Manokaran said despite the surprising growth figures, the global and
domestic economy's outlook for the rest of the year would still be dampened by
the eurozone debt crisis, slower expansion in China and tepid growth in the
United States.
“We believe the eurozone crisis will continue to have an impact on
trade and this will show itself in slower exports growth,” he said.
He added that with a drop in manufacturing activity, sentiments
would be affected, leading to slower growth in the domestic-oriented services
sector as consumption slowed.
Manokaran said Purchasing Managers Index (PMI) for July indicated
that exports would slow as demand dropped in developed markets.
CIMB Investment Bank Bhd economic
research head Lee Heng Guie said in a report that the leading index for June
suggested that the economy could weaken in the second half.
“We caution that a sharply high base in the second half of last
year poses a hurdle to year-on-year growth,” he said.
He pointed out that the global Organisation for Economic
Co-operation and Development composite leading together with regional
high-frequency indicators, including trade and PMI, were still under external
pressures.
Meanwhile, the Statistics Department released data showing that
July prices as measured by the Consumer Price Index gained 1.4% year-on-year to
104.8 and remained unchanged compared with the previous month.
Source : The Star
Date : 16 August 2012
afternoon highlight
(16/08/12/145/619)
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