KUCHING: The Malaysian economy registered a total growth of 7.2 per cent for 2010 as a whole, on the back of economic sectors, with the exception of primary sectors, continuing to expand further during the fourth quarter of 2010.
In a statement yesterday, Bank Negara Malaysia (BNM) revealed that the country registered a growth of 4.8 per cent in the fourth quarter of 2010.
Domestic demand strengthened by 5.7 per cent in the fourth quarter, due mostly to the strong expansion in private consumption and capital spending. Private consumption increased by 6.5 per cent supported by favourable labour market conditions,
positive consumer confidence and higher income levels.
Public consumption, on the other hand, declined by 0.3 per cent
(arising from lower expenditure on supplies and services). Gross fixed capital formation increased by 9.2 per cent driven by both public and private capital spending.
BNM noted that private sector capital spending was led by the expansion in the production of domestic-oriented industries amid high levels of capacity utilisation.
Public sector capital investment rose as a result of higher development expenditure mainly in the education and transportation sectors.
In the external sector, the trade surplus widened to RM25.5 billion in the fourth quarter). Both gross exports and imports increased at a more moderate pace of 3.7 per cent and 10.1 per cent respectively, in line with the moderation of the global economy.
The slower growth in exports was due mainly to the lower exports of manufactured products, reflecting the softening global demand for electronics.
The moderation in gross imports reflected mainly lower intermediate imports while imports of capital and consumption goods were sustained amidst strengthening domestic demand.
On a cash basis, gross inflows of foreign direct investment (FDI) higher at RM11.8 billion in the fourth quarter, reflecting mainly larger inflows of equity capital. After adjusting for gross outflows due to repayment of inter-company loans, net FDI increased to RM8.3 billion.
BNM went on to note that FDI was channelled mainly into the services, manufacturing and mining sectors.
The Overnight Policy Rate (OPR) was left unchanged at 2.75 per cent in the fourth quarter of 2010 and also at the MPC meeting held on 27 January 2011. At the prevailing level, the OPR remains accommodative and is considered to be appropriate and consistent with the assessment of growth and inflation prospects.
In the mean time, the demand for financing from both the public and private sectors was supported by continued access to financing, the reasonably low cost of borrowing and ample liquidity in the financial system.
Total gross financing raised by the private sector through the banking system and capital market increased to RM220.9 billion in the fourth quarter. On a net basis, banking system loans and PDS outstanding rose by an annual rate of 11.4 per cent as at end-December. Major loan indicators remained strong in the fourth quarter.
Net funds raised in the capital market by both the public and private sectors amounted to RM30.5 billion. In the private sector, fund raising activity was mainly from the bond market.
In the public sector, funds were raised through issuances of Malaysian Government Securities (MGS) and Government Investment Issues (GII).
Monetary aggregates continued to grow at a sustained pace in the fourth quarter. M3, or broad money, expanded at an annual growth rate of 7 per cent as at end-December 2010.
During the quarter, the ringgit appreciated marginally by 0.1 per cent against the US dollar. The appreciation of the ringgit towards the end of the year following renewed optimism on the growth outlook for Asia roughly offset its earlier depreciation in October and November amid higher risk aversion following concerns over the European sovereign debt problems and tensions in the Korean Peninsula.
Financial stability was maintained throughout the fourth quarter, supported by sound financial institutions and orderly financial markets which provided continued support for financial intermediation in the domestic economy.
Going forward, the global economic recovery is expected to remain uneven across the different regions. The growth outlook for Asia remains favourable, supported by robust domestic demand.