Thursday, August 30, 2007

Malaysia’s GDP grows 5.7% in second quarter

TheStar

KUALA LUMPUR: Malaysia's economy expanded by 5.7% in the second quarter this year, higher than the 5.5% rate in the first quarter but less than the 6.1% growth a year earlier.

Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said the gross domestic product growth in the second quarter was underpinned by domestic demand, which expanded 10.8% compared with 7.2% in the same quarter last year.

Private sector domestic demand was firm as income levels were steady due to stable employment conditions and high commodity prices. This more than offset a decline in the export growth of 3% compared with 5.5% in the second quarter 2006, she told the media yesterday.

The slower export growth was reflected in the expansion of just 1.5% in the manufacturing sector in second quarter 2007 compared with 8.4% a year earlier.

There was, similarly, a decline in output of 0.9% in the agricultural sector compared with an increase of 3.9% in the second quarter last year. This decline was due to weather conditions. It is understood that this refers to the floods encountered in several states during the period.

Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz, announced Q2 2007 GDP on Wednesday

The weakness in the manufacturing and agricultural sectors in the second quarter 2007 was more than offset by an expansion of 9.2% in the services sector compared with 7% in the previous corresponding period. The expansion was led by finance, insurance and business services.

“We used to describe financial services as an enabler of growth. Now, it has become a source of growth, generating income and employment,” Zeti said.

Growth in the manufacturing sector was slow in second quarter, mainly due to “significant weakness” in the electrical and electronics industry, but it remained an important part of the economy. “It formed about a third of the economy,” she said.

There is a significant transformation in the manufacturing sector where higher-valued products would be manufactured, with new sources of growth industries such as petrochemicals and biotechnology.

The inflow of foreign direct investments was strong in the second quarter, amounting to RM13.6bil, compared with RM2.5bil in the same period last year.

Zeti said she expected economic growth in the second half this year would remain firm as tourist arrivals would peak during the period, there would be a higher output of oil and gas from new facilities and implementation of projects under that Ninth Malaysia Plan, which would reinforce the strong domestic demand.




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