Services and manufacturing remain key contributors to economy
05 Apr 2020
The services and manufacturing sectors remained as key contributors to Malaysia’s economy, which grew 4.3 per cent last year.
Bank Negara Malaysia, in its inaugural Economic and Monetary Review 2019, said the two sectors had expanded at a moderate pace last year.
This was mainly due to weaker external demand and a normalisation in household spending growth.
Bank Negara said the services sector expanded by 6.1 per cent (2018: 6.8 per cent), as growth normalised following a robust performance in 2018, when the tax holiday period encouraged greater consumer spending.
Growth in the wholesale and retail trade as well as food, beverages and accommodation subsectors remained firm, lifted by firm household spending amid supportive labour market conditions.
The transport and storage subsector benefitted from higher transhipment activity, despite being partially offset by slower global trade activity.
Growth in the finance and insurance subsector moderated amid slower loan and deposit growth.
Bank Negara said this, however, was partially mitigated by the rebound in the fee-based income as a result of more initial public offerings during the year.
Growth in the information and communication subsector moderated, following the one-off price reduction in fixed broadband prices under the Mandatory Standard Access Pricing regulation in 2018.
Meanwhile, Bank Negara said the manufacturing sector had recorded a slower growth of 3.8 per cent last year (2018: 5.0 per cent).
Within the export-oriented clusters, weak external demand affected manufacturing activity in the electrical and electronics (E&E) cluster, while the supply disruptions in key commodities led to lower production in primary-related clusters.
Growth in both clusters, however, remained positive.
This was supported by the presence of Malaysian E&E firms in diversified, fast-growing product segments such as automotive electronics, medical devices and cloud computing, as well as the recovery in natural gas output.
Bank Negara said domestically, the frontloading of demand for passenger cars during the tax holiday period in 2018 had weighed on the production of transport equipment in 2019.