Malaysia Growth at 2-Year High

Malaysia’s central bank has said that its GDP grew 5.6% year over year in the first quarter of 2017, compared with 4.5% in the fourth quarter of 2016. This is the highest rate of growth in two years, and Bank Negara Malaysia attributed it to higher domestic demand and better export prospects.

Moreover, higher investments have improved the outlook for the economy, as private sector demand increased 8.2% year over year in the first quarter of 2017, Bloomberg reported.

Adding to this, on May 12, the central bank left its Overnight Policy Rate unchanged amid reduced economic growth worries. Bank Negara Malaysia left its benchmark interest rate unchanged at 3%.

However, the country is facing inflation woes, as its headline inflation increased to 4.3% in the first quarter of 2017, which the bank attributes to the rise in global oil prices and the temporary surge in food prices. Though the bank expects it to stabilize in the latter half of the year, the future course of this statistic is highly uncertain, owing to the uncertainty around the path oil prices will take.

Malaysia’s robust economic growth of 5.6% in the first quarter of 2017 is beyond the expectations of many, said Permodalan Nasional Bhd Chairman Abdul Wahid Omar, Bernama reported.

He said the government’s resolve by focusing on the fundamentals has been proven to be the right strategy. “It is underpinned by broad-base growth in all sectors. I encourage all quarters to play their respective part to grow the economy,” he told reporters on the sidelines of the launch of the National Transformation Program Annual Report 2016.

Meanwhile, International Trade and Industry Minister Mustapa Mohamed said the endorsements of international firms such as Forbes, BAV Consulting and the Wharton School of the US, reflected investor confidence in the country.

“They ranked Malaysia as the best country for investors in 2017 and a top destination for foreign direct investments among Asian countries,” he said and added that Malaysia had done well in trade, as well as tourism, this was indicated by the influx of Chinese tourists into the country.

“We need to sustain this momentum, we need to ensure peace and stability as this is one of the hallmarks of Malaysia, our ability to live together in peace and harmony,” he added.