Malaysia’s growth fastest since 2010
Malaysia's economy grew at the fastest pace in two and a half years last quarter as Prime Minister Najib Razak boosted spending ahead of an election that will test his grip on power.
- Published: 20/02/2013 at 05:48 PM
- Newspaper section: breakingnews
Malaysian ringgit banknotes (Bloomberg Photo)
Gross domestic product rose 6.4% in the three months through December from a year earlier, after a revised 5.3% gain in the previous quarter, the Statistics Department said in a statement in Kuala Lumpur today. That compares with the median estimate of a 5.5 percent advance in a Bloomberg News survey of 21 economists. The economy grew 5.6% in 2012.
Asian countries from Indonesia to the Philippines have shown resilience to the faltering global economy as local demand rises. Najib has increased government expenditure ahead of elections that must be held by late June, extending cash handouts to low- income families and raising civil servants’ pensions as part of a 251.6 billion ringgit (US$81 billion) budget for 2013.
"Domestic demand has been strong" led by investment and consumption, Santitarn Sathirathai, an economist at Credit Suisse Group AG based in Singapore, said before the report. "Malaysia will be among the first central banks in Asia to shift toward a more hawkish bias, perhaps after the general election."
Malaysia's government forecasts the economy will expand 4.5% to 5.5% in 2013. Domestic demand is expected to continue to expand, led by the private sector, the central bank said last month, adding improving global demand will provide additional support this year.
Najib, whose ruling coalition won the 2008 vote by its narrowest margin in five decades, must dissolve parliament by April 28 for polls to be held within 60 days. The general election may be conducted in April as the prime minister still needs "a week or two" to complete matters including campaign manifestos and candidate lists before dissolving parliament, the Star reported on Wednesday, citing an unidentified party official.
The FTSE Bursa Malaysia KLCI Index has fallen 4.8% after hitting a record on Jan 7 on concern that Najib's governing National Front alliance may lose seats in parliament. The ringgit has fallen about 1.2% this year, among the worst performers within a basket of 11 Asian currencies tracked by Bloomberg. The ringgit rose 0.4% against the US dollar to 3.0965 as of 5.28pm in Kuala Lumpur.
Malaysia's central bank joined neighbors including Indonesia in maintaining interest rates this year as an accelerating economy and the lowest inflation among Southeast Asian major economies reduced the need for monetary policy action. The Bank of Thailand kept its interest rate unchanged for a third straight meeting today as economic growth quickened.
Consumer prices in Malaysia rose 1.3% in January, after a 1.2% gain in December, the Statistics Department said today. The central bank kept its benchmark overnight rate unchanged at 3% for a 10th straight meeting on Jan 31.
Services rose 6.3% in the September-to-December period from a year earlier after climbing 7% in the third quarter, today’s report showed. Construction gained 18.1% last quarter, after an 18.3% pace the previous period.
Exports of goods and services slid 1.5% in the fourth quarter from a year earlier, after falling 3% in the third quarter in 2012, according to the report on Wednesday.
Malaysia's export-dependent economy remains vulnerable to fluctuations in global demand as the US debates spending cuts and Europe continues to struggle with a debt crisis. Still, the government expects overseas shipments to improve this year for exporters of goods including automotive components, commodities and semiconductors. Exports of goods may rise 2% to 4% in 2013, Trade Minister Mustapa Mohamed said on Feb 8.
About the author
- Writer: Bloomberg News
- Position: News agency