Malaysia’s economy recorded robust growth of 5.6 per cent in the first quarter of this year (1Q17) against the 4.1 per cent registered in the same quarter of 2016, boosted by strong domestic demand and private expenditure.
Bank Negara Malaysia (BNM) Governor Muhammad Ibrahim said growth for the just ended quarter was the best since the corresponding quarter of 2015, which saw gross domestic product (GDP) at 5.8 per cent.
During the 1Q17, domestic demand increased to 7.7 per cent supported by continued expansion in private sector expenditure, which grew by 8.2 per cent and the turnaround in public sector expenditure.
Private consumption rose 6.6 per cent, while investments grew sharply by 12.9 per cent following continued capital spending in the services and manufacturing sectors.
Investments in machinery and equipment were higher during the quarter, supported by the implementation of several large-scale projects in the manufacturing sector.
Public consumption recorded a 7.5 per cent growth in 1Q17 due to higher spending on both emoluments as well as supplies and services, while investments improved 3.2 per cent, driven mainly by higher spending on fixed assets by public corporations.
Meanwhile, headline inflation rose by 4.3 per cent due to higher fuel oil prices with RON95 petrol averaging RM2.23 per litre compared to RM1.73 in the same quarter last year.
“We anticipate inflation to range between 3.0-4.0 per cent this year,” Muhammad told a press conference to announce the first quarter GDP performance in Kuala Lumpur, today.
The Governor said Malaysia’s household debt had reduced to 88.4 per cent during the said quarter from 89 per cent at end-2016 on the back of stable labour market conditions and adequate financial buffers.
He also said demand for home financing remained a key contributor to the debt level during the reviewed quarter, adding, outstanding housing loans expanded 8.5 per cent annually.
The overall housing loans approval rate remained high at 74.2 per cent with banks approving RM22.3 billion to 90,137 borrowers during the quarter, of which half, was for affordable housing units priced below RM500,000.
Going forward, Muhammad said the economy was on track to register higher growth of between 4.3 per cent and 4.8 per cent this year on anticipation of a further expansion in domestic demand, better export growth, and moderate inflation in the coming quarters. – Bernama