Malaysian Industry

Malaysian Economy Grew by 4.6% in First Quarter 2011

1. Overall Economic Performance

The Malaysian economy grew by 4.6% in 1st Quarter 2011 as domestic demand overcame the modest recovery in advanced economies, said Bank Negara governor at the release of the first quarter data. For the 2011, Bank Negara has projected 5-5% economic growth for Malaysia.

2. Demand and Supply

The domestic demand expanded by 6.6% as private sector investments and government consumption grew. Private consumption rose by 6.7% on favourable labour market and income growth while gross fixed capital formation was up 6.5% as companies invested more amidst high capacity utilisation rates and planned investment projects.

The service sector grew by 5.9% where trade surplus widened to RM36.1 billion in the Q1 2011 against RM25.5 billion in the 4Q 2010. Both gross exports and imports registered stronger growth of 7.5% and 12.4% respectively.

On the supply side, all sectors showed growth except for the primary commodities sector which was affected by poor weather and lower crude oil production.

3. Inflation

Bank Negara is maintaining its inflation rate projection between 2.5% and 3.5% this year, despite mounting inflationary pressures. And depending on the economic conditions, Bank Negara would revise the inflation rate.

The Statistics Department announced that the consumer price index (CPI) for April stood at 3.2% from a year ago, driven by higher food and transportation prices. The CPI rose by 2.8% on an annual basis in the Q1 2011. This was due to the increase in global commodity and food prices.

4. Conclusion

Bank Negara expected the economic growth momentum to accelerate in the 2nd half of 2011 when rebuilding takes place in Japan, boosting commodity prices and demand for timber.

Source: StarBiz, 18/5/2011: 4.6% Q1 growth

Abd Rahaman Rasid

FELDA