Breaking News

Malaysia first-quarter growth rises strongly on solid exports, domestic demand

Stock MarketsMay 19, 2017 01:45AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. Worker inspects container in Port Klang

By Joseph Sipalan

KUALA LUMPUR (Reuters) - Malaysia's economy grew at a better-than-expected 5.6 percent the first quarter, easily beating expectations, as buoyant exports and solid domestic demand produced the fastest growth in two years.

January-March growth, announced by the central bank on Friday, was well above a Reuters poll forecast of 4.8 percent and the previous quarter's 4.5 percent expansion.

"We expect growth to be sustained," Bank Negara Malaysia (BNM) Governor Muhammad Ibrahim told at a news conference.

He said the central bank was keeping its full-year growth forecast at 4.3-4.8 percent. In the first quarter, he said, it saw "strong growth in private investments and exports".

March exports surged 24.1 percent from a year earlier in ringgitterms, and those in February 26.5 percent.

But the current account surplus, which has generally been decreasing, narrowed in the first quarter to 5.3 billion ringgit from 12.5 billion ringgit in 2016's last period, due to lower goods surplus and larger services deficit.

"A recovery in commodity prices should help bolster the current account surplus in the coming quarters, though the surplus is still likely to remain low by past standards," Capital Economics said in a note.

Portfolio investments saw a big net outflow of 31.9 billion ringgit, compared to a 19.1 billion outflow in the fourth quarter.

Capital outflows hit a record in November-January, when foreign investors divested holdings of government bonds to the tune of 27.9 billion ringgit ($6.46 billion).

In early 2016, tepid demand for Malaysia's oil and other commodity exports pulled full-year growth down to 4.2 percent, the lowest since contraction in 2009, from 5.0 percent in 2015.


The ringgit, one of the region's worst performing currencies, in 2016, hit a 19-year low of 4.9880 on Jan. 4 but so far this year has strengthened about 3.7 percent against the dollar.

The BNM governor said that stability measures have reduced volatility in the ringgit and the domestic forex market.

"We think the ringgit will further reflect the strength of the Malaysian economy," Muhammad said.

The central bank has said inflation averaged at 4.3 percent in Q1.

Annual consumer price inflation hit an eight-year high in March at 5.1 percent, though it slowed to 4.4 percent in April.

"The spike (in inflation) was largely due to higher oil prices. We still expect inflation to come in at 3-4 percent. Again, there is some uncertainty in global markets, but what is important is its cost driven and not due to demand," Muhammad told reporters.

Rising living costs could eat into support for Malaysia's long-ruling political coalition led by Prime Minister Najib Razak, who is widely expected to call for early polls later this year to take advantage of a weak and divided opposition.

Najib, whose popularity took a hit from a corruption scandal involving state-owned fund 1Malaysia Development Berhad (1MDB), also needs a strong economy to bolster his electoral chances.

Malaysia first-quarter growth rises strongly on solid exports, domestic demand

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Are you sure you want to delete this chart?
Write your thoughts here
Replace the attached chart with a new chart ?
Post also to:
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Post 1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email