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Malaysia: Q-3 economic growth moderates to 5.2%

Malaysia’s economic growth in the Q-3 moderated to 5.2% compared with the previous Quarter’s 5.6%, bolstered by private consumption and investment as volatile global economy continues to hurt exports, the central bank said on Friday in an economic report.

Domestic demand expanded by 11.4% supported by continued expansion in private consumption, favorable labor market conditions and sustained income growth, the report showed.

The bank said the bonus payment to civil servants and pay outs to the rural plantation settlers boosted consumer spending.

Public spending moderated to 2.3% on lower spending in supplies and services.

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The current account surplus narrowed to 9.5-B Ringgit as imports growth outpaced exports.

Growth in the manufacturing sector slowed 3.3% while the mining sector contracted led by a Nat Gas production decline.

The construction and services sectors however recorded a robust growth, pushed by domestic demand.

The headline inflation moderated to 1.4% in Q-3, slightly lower if compared with the 1.7% consumer price index in Q-2.

The bank had kept the overnight policy rate at 3% since last May to support domestic economy.

The central bank said it has US$138.3-B in foreign reserves as of 31 October, about four times the country’s short-term external debt.

The Ringgit appreciated by 4% against the USD, resulted by positive investor sentiments following further monetary easing in the advanced economies and expectations for progress on Eurozone crisis.

The ringgit also strengthened against the Japanese yen and euro but weakened against the Chinese renminbi.

The bank expects domestic demand to continue to buffer the potential risks caused by the more challenging international environment.

“Domestic demand is expected to continue to be the anchor of growth, supported by the expansion in private consumption and investment,” the bank said.