MIDA e-News

The Malaysian economy recorded a solid 5.4% growth in the second quarter of the year, surpassing even economists’ highest forecast of 5.2%, up from the revised 4.9% in the first quarter of 2012.

The expansion was driven by a double-digit increase in domestic demand of 13.8% as against 9.7% in the first quarter, supported in particular by a rise in private investments.

In announcing the quarterly economic performance in Kuala Lumpur yesterday, Bank Negara Malaysia (BNM) Governor, Tan Sri Dr Zeti Akhtar Aziz said the rise in private investments was the most encouraging aspect of the local economy, which she attributed to the vast improvements in the investment environment following Malaysia’s better rankings in several global surveys in the areas of competitiveness, costs and ease of doing business.

A higher roll-out of major investments by both Malaysian and foreign investors had supported growth in the second quarter.

Major projects included the RM4.6 billion Sabah-Sarawak gas pipeline, the RM12.5 billion Ipoh-Padang Besar Electrified Double Tracking project, the RM5 billion Janamanjung power plant and the RM700 milion Legoland.

Both private and public sectors continued to invest in the local economy with gross fixed capital formation posting a significant 26.1% growth as compared with 16.1% in the first quarter.

Private investments, which expanded by 8.8%, were seen in the domestic-oriented services sub-sectors, oil and gas and manufacturing activities.

Public expenditure was more in areas such as transportation, oil and gas and utilities as well as in development expenditure for transportation, trade and industry, public utilities and education.

All sectors of the economy except agriculture expanded in the second quarter.

The Services sector expanded by 6.3 % driven by Wholesale & Retail Trade and Finance & Insurance.

The Wholesale & Retail Trade grew 5.9 % while Finance & Insurance added 6.6%. Business services saw a 8.8% increase supported by demand for engineering-related professional services.

The Manufacturing sector posted a 5.6 % growth in the second quarter led by the Petroleum, Chemical, Rubber and Plastic Products which expanded by 9.6 % due to the higher output of refined petroleum products.

The Transport Equipment & Other Manufactures continued to grow, posting a 7.5% increase brought about by a double-digit production of motor vehicles. Electrical & Electronics edged up by 3.5 % as compared to the marginal 0.4 % increase in the preceding quarter, in line with higher demand from United States, Japan and China.

The Construction sector registered a significant expansion of 22.2% from 15.5% in the first quarter of the year, boosted by the strong performance in the Civil Engineering and Residential segment, which turned in a robust 39.8% growth, supported by infrastructure projects especially in Sabah, Malacca, Penang and Perak.

The Mining and Quarrying sector recorded a 2.3% increase in the second quarter due mainly to a 8.8% higher output of crude oil while the production of natural gas declined by 4.4%.

The agriculture sector contracted 4.7% due to the lower production of oil palm, forestry products and rubber.

Tan Sri Zeti said Malaysia’s monetary policy continued to support growth while the economy continued to benefit from a stable and sound financial market during the quarter.

The banking sector also remained resilient with ample liquidity to support economic activities.

Malaysia’s international reserve as at 31 July 2012, reached RM429.6 billion (equivalent to USD134.5 billion), sufficient to finance 9.5 months of retained imports and is 3.9 times the short-term external debt.

Meanwhile, the first half year’s growth was at 5.1% compared with the same period in 2011, indicating that Malaysia’s is likely to post a whole year’s gross domestic product (GDP) growth closer to 5%, she added, noting the official forecast is between 4% to 5%.

Adapted from New Straits Times and StarBiz 16 Aug 2012, BNM and Department of Statistics Malaysia websites