BusinessTimes
THE Malaysian economy accelerated at 6.7 per cent in the third quarter of this year, lending high confidence that 2007’s growth will be within the six per cent forecast, says Bank Negara Malaysia (BNM) Governor Tan Sri Dr Zeti Akhtar Aziz.
She attributed the impressive growth pace to domestic demand which strengthened at 12.6 per cent (from 10.8 per cent in the second quarter), on the strength of private sector activities.
The gross domestic product (GDP) in the third quarter expanded from a revised 5.8 per cent in the second quarter. It beat market expectations and a Business Times poll which had expected the economy to register an average growth of 5.87 per cent year-on-year.
“We have one month left in 2007 and we have seen very robust domestic demand and significant investment activity, so we have a high degree of confidence we will achieve six per cent growth for this year,” Zeti said at a press conference in Kuala Lumpur yesterday.
Going into 2008, there is potential of slower export performance as Malaysia will not be immune to the US economic cycle, she added, although there is no clarity at the moment if the world’s biggest economy is slipping into a sharp slowdown or recession.
“While we are an export-led economy, our domestic demand has become more significant, and this will play a more important role not to be directly linked to the US economic cycle, and therefore, we expect a partial de-coupling to take place.
“We will review the situation … (but) based on the information, we will remain on a steady growth path of six per cent,” Zeti said.
Higher energy prices could translate into higher inflation and BNM is monitoring the situation.
“However, we see mitigating factors — Malaysia is still operating below potential. We have not exceeded our potential growth,” Zeti said.
The central bank expects inflation to grow between two and 2.5 per cent for 2007.
BNM said the services sector continued to post strong growth for the third consecutive quarter, at 10.5 per cent growth (from a revised 9.4 per cent in the second quarter), on strong domestic demand, tourism and business activities.
The manufacturing sector expanded 3.4 per cent this quarter (from 1.5 per cent in the second quarter), while the construction sector grew 4.7 per cent. The agriculture and mining sector increased by 0.6 and 2.3 per cent respectively.
Standard Chartered Bank’s regional head of economic research (Southeast Asia) Tai Hui, who had expected a 6.6 per cent growth in the third quarter, said domestic demand remained strong, while strong external demand for commodities had offset the sluggish electronics sector.
“With the solid Q3 performance, we expect our full-year GDP growth forecast of six per cent to remain intact, continued to be supported by domestic consumption and commodities demand, although softer external markets and the global credit market worries should see some easing of growth momentum as we enter the final quarter of the year,” Hui added.
Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.
