Malaysias Economy grew 4.1% in Q1

Malaysia's economy grew at a moderate 4.1% in the first quarter of 2013 amidst the slowing global economy. However with robust domestic demand continuing to drive the local economy, Bank Negara Malaysia (BNM) Governor, Tan Sri Zeti Akhtar Aziz said the country's growth forecast for 2013 remains within the 5%-6% range.

Tan Sri Zeti was speaking at a media briefing on Malaysia's economic and financial developments in the first quarter of 2013 in Kuala Lumpur, yesterday.

The Malaysian economy was significantly affected by the weakness in external demand which saw a drop of 0.6% in goods export while import added 3.6% due mainly to higher imports particularly in Machinery & Transport Equipment with a one-off increases in aircraft purchases.

Domestic demand in the first quarter expanded by 8.2% with private consumption adding 7.5% from 6.2% in the fourth quarter of 2012, supported by the sustained income growth and favourable labour market conditions, particularly following the implementation of the minimum wage policy.

Gross fixed capital formation recorded a 13.2% growth. Private sector investment rose by 10.9% mainly in domestic- oriented manufacturing and consumer-related services sub-sectors, besides the on-going projects in the oil and gas sector. Investment by public enterprises recorded a 17.3% increase in the oil and gas, utilities and telecommunication sectors.

All sectors of the economy except for Mining and Quarrying registered positive growth during the quarter.

The Services sector, registered a 5.9% growth in the first quarter supported by expansion in Finance & Insurance at 6.2% with Insurance activity recording a double-digit growth of 16.8% especially in life insurance and Wholesale & Retail Trade, which added 5.9 % with Retail activities posting a 6.9% growth.

Communication expanded by 9.0 % due to demand for data communication services brought about by a rising broadband penetration rate.

Growth in the Manufacturing sector moderated to 0.3% in the first quarter of 2013 mainly due to a dip in the Petroleum, Chemical, Rubber & Plastic products. However, Transport Equipment & Other Manufactures and Non-metallic Mineral products, Basic Metal & Fabricated Metal products contributed to the positive growth of the sector.

In the first quarter, the Agriculture sector posted a 6.0% growth given the strong expansion in the Oil Palm, Other Agriculture (including vegetables and fruits) and Fishing sub-sectors.

The Construction sector continued to expand for five consecutive quarters, registering a 14.7% growth in the first quarter backed by the strong performance in Civil Engineering with a 36.2% growth, particularly in infrastructure development. Meanwhile, Residential added 9.8% with housing development projects being undertaken mainly in the Klang Valley and Penang.

The Mining and Quarrying sector recorded a drop of 1.9% due to a 2.8% decline in the production of crude oil and 6.5% dip in the output of condensate while natural gas production recorded a marginal positive growth.

Malaysia recorded an overall balance of payments surplus of RM 4 billion while the current account surplus was lower at RM8.7 billion due to a reduced goods surplus, as well as a larger services deficit and income outflows. However, the financial account recovered with a net inflow of RM1 billion as against a net outflow of RM10.3 billion in the preceding quarter.

The international reserves as at 29 March 2013 was RM 431.2 billion (equivalent to USD139.6 billion) while at 30 April 2013 the reserves stood at RM 433.3 billion (equivalent to US$140.3 billion), which is sufficient to finance 9.5 months of retained imports and is 4.3 times the short- term external debt.

Source: NST Business Times and StarBiz, 16 May 2013, Data from Bank Negara Malaysia and Department of Statistics (DOS) websites