KUALA LUMPUR: The Malaysian economy expanded by 5.2 per cent in the fourth quarter last year, leading to a growth of 5.1 per cent for the whole year, Bank Negara Malaysia said.
In a statement yesterday, it said domestic demand, supported by both private and public sector spending, helped the growth despite a challenging external environment.
“On the supply side, the services sector recorded slower growth, while the manufacturing sector grew at a similar pace with that of the previous quarter, reflecting the weaker external environment amid sustained growth in domestic activity.
“Other sectors, however, recorded improvements during the quarter, while the agriculture sector continued to record strong growth,” the central bank said.
Domestic demand expanded by 10.5 per cent during the quarter under review, driven by the continued expansion in household and business spending and public sector expenditure.
“Private consumption increased by 7.1 per cent, supported by favourable income growth while public consumption expanded by 23.6 per cent following higher expenditure on emoluments and supplies and services.
“Gross fixed capital formation increased by 8.5 per cent, supported by continued expansion in capital spending by the private sector and non-financial public enterprises,” Bank Negara said.
The central bank said that the Federal Government development expenditure during the quarter was mostly channelled into the transportation, trade and industry sectors.
The agricultural sector continued to expand on strong crude palm oil production, while the construction sector registered higher growth, supported by the implementation of major infrastructure projects.
“The headline inflation rate declined to 3.2 per cent, with the transport category slipping to 3.2 per cent, reflecting the absence of further adjustments on prices of RON95 petrol, diesel and liquefied petroleum gas.”
“Inflation in the food and non-alcoholic beverages category, however, rose to 5.3 per cent during the quarter mainly due to higher prices in the fish and seafood subcategory,” Bank Negara said.
On the external sector, it said, the current account surplus narrowed in the fourth quarter, but remained large at RM22 billion, equivalent to 10.1 per cent of gross national income.
The lower surplus was due to a lower goods surplus, higher trade deficits and larger income outflows.
The goods surplus was slightly lower at RM36.9 billion as gross exports expanded at a more moderate pace while import growth was sustained.
The financial account turned around from a net outflow position to record a small net inflow of RM200 million during the quarter under review, due to the significantly smaller net outflow of portfolio funds and higher net inflow of other investments.
“During the quarter, foreign direct investment recorded a higher net inflow of RM6.5 billion, driven by higher retained earnings by the multinational companies in Malaysia and higher inflow of equity capital,” the central bank said. — Bernama
Direct investments abroad by Malaysian companies increased further to RM14.4 billion, reflecting higher outflow of equity capital and larger earnings retained abroad for investment purposes.
The overall balance of payments continued to remain strong, recording a surplus of RM6.3 billion during the quarter, as the current account surplus remained high and the financial account registered a net inflow position, Bank Negara said.
As at Dec 31, 2011, the international reserves of Bank Negara amounted to RM423.4 billion, after taking into account the quarterly adjustment of the foreign exchange revaluation loss, following the strengthening of the ringgit against some major currencies during the quarter.
“As at Jan 31, 2012, the reserves position amounted to RM424 billion, sufficient to finance 9.6 months of retained imports and was 4.1 times the short-term external debt,” it said.
Bank Negara said it expected Malaysia’s economic growth to be moderate this year amid the challenging external environment.
“Growth prospects have become increasingly uncertain with the emergence of greater downside risks.
“In particular, policy uncertainty on the resolution of the ongoing sovereign debt crisis in Europe amid fiscal consolidation in the advanced economies could add further strains to the international financial system, thus affecting the prospects for continued global growth,” it said.
Nonetheless, domestic demand will continue to be the key driver of growth this year, supported primarily by continued expansion of private sector activity, it said, adding that public sector expenditure will also lend strong support to the overall growth performance. — Bernama