Malaysia’s economic growth eased last quarter on weaker exports, a slowdown that could deepen after the start of a new consumption tax in April.
Gross domestic product rose 5.6 percent in the three months through March from a year earlier, after climbing a revised 5.7 percent in the final quarter of 2014, the central bank said in Kuala Lumpur. The median in a Bloomberg News survey of 24 economists was for a 5.5 percent increase.
Malaysia’s central bank has refrained from joining global counterparts in easing monetary policy, saying interest rates are delivering support for growth while guarding against inflation risks.
Economic expansion may lose steam as an uneven global recovery hurts export demand and prompts consumers and companies to hold back spending.
The ringgit was Asia’s worst performer last quarter as a drop in crude prices hurt government finances and dented investor confidence. It has since swung to become the region’s second-best amid a rebound in oil.
The currency rose 0.4 percent as of 11:45 a.m. in Kuala Lumpur, according to data compiled by Bloomberg.
The Malaysian economy is forecast to grow 4.5 percent to 5.5 percent this year, down from an earlier projection of as much as 6 percent.
Expectations Trimmed
The government trimmed expectations as it cut expenditure amid lower expected revenue from oil.
The central bank left its key rate unchanged for a fifth straight meeting this month, saying prospects are for the economy to remain on a steady growth path.
Governor Zeti Akhtar Aziz signaled last month she sees no need for a rate cut in the near future, barring the threat of a “fundamental” downturn.
Prime Minister Najib Razak’s efforts to broaden the tax base through a six percent goods and services has pushed up prices at supermarkets, restaurants and retailers. While the experience in other countries showed a moderation in consumer spending in the first year of such a tax, lower oil prices may be a buffer to an expected easing in consumption, Zeti said in April.
Exports fell 0.6 percent in the first quarter from a year earlier, after increasing 1.9 percent in the previous three months. Manufacturing growth quickened to 5.6 percent, while private investment rose 11.7 percent.
Private consumption expenditure climbed 8.8 percent last quarter from a year ago, accelerating from 7.6 percent in the previous period. Household consumption was “high” on food and beverages, transport and communication, the statistics department said in a statement Friday.
