Economy expands faster at 5.6% in Q1

KUALA LUMPUR, May 19 – Malaysia’s economy grew at a faster pace of 5.6% in the first quarter ended March 31, 2017, exceeding the consensus of a 4.8% growth, powered by the manufacturing and services sectors.

Bank Negara Malaysia (BNM) said on Friday that growth, on the expenditure side, was underpinned by an increase in private consumption of 6.6%, investments at 12% and exports at 9.8%.

Headline inflation during Q1 was at 4.3%. BNM explained that public perception of actual inflation tend to be higher, influenced by personal experiences.

Meanwhile, the Statistics Department said the Q1 2017 growth of 5.6% was up 1.8% from the 4.5% in Q4 of 2016.  It also recorded stronger growth from the 4.1% in Q1 of 2016.

“All sectors on the production side posted a favourable growth except for mining and quarrying sector. Services, manufacturing and agriculture were the major drivers of the economy.

The services sector grew at a faster pace of 5.8% (Q4 2016: 5.5%) mainly led by wholesale and retail trade which expanded to 6.3%. The information and communication segment recorded a growth of 8.2%. The business services grew at 8.4% due to a favourable momentum in professional activities.

The manufacturing sector grew 5.6%,  gaining pace from the 4.7% in Q4 2016. Leading the growth were electrical, electronic & optical products (7.9%), mainly in production of printed circuit boards and semiconductors. 

The agriculture sector rebounded with a growth of 8.3% after posting a negative growth of 2.5% in Q4 2016. The growth was spearheaded by oil palm which surged 17.7% (Q4 2016: -7.2%) following a higher yield of fresh fruit bunches in this quarter. 

It said the construction sector recorded a 6.5% growth due to the higher activities in the civil engineering and residential buildings.

Mining and quarrying rose 1.6% due to slower production of crude oil and natural gas.

“On the expenditure side, private final consumption expenditure and gross fixed capital formation were the main catalyst for the growth,” it said.

The Statistics Department said  private final consumption expenditure grew 6.6% (Q4 2016: 6.1%) backed by the consumption on food & non-alcoholic beverages, communication and housing, water, electricity, gas & other fuels.

Gross fixed capital formation (GFCF) soared to 10% from 2.4% in the previous quarter. The better growth in

GFCF was stimulated by machinery & equipment which rose to 21.8% from 2.9% in Q4  2016.

“Exports rose at 9.8% in this quarter. The favourable growth was reflected by the strong performance in the exports of goods. Imports escalated to 12.9% (Q4 2016: 1.6%) due to an increased in imports of goods while services declined in this quarter,” it said.

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