Malaysia's Economy Grows 4.3 Pct In Q3 2016

KUALA LUMPUR, Nov 11 (Bernama) -- Malaysia's economy expanded 4.3 per cent in the third quarter driven mainly by domestic consumption and net exports, Bank Negara Malaysia (Malaysia's Central Bank) Governor Muhammad Ibrahim announced Friday. The economy grew 4.0 per cent between May and June this year. On a seasonally adjusted quarter on quarter basis, the economy grew 1.5 per cent in the third quarter against 0.7 per cent in the second quarter of 2016, he said at a press conference here. Headline inflation moderated to 1.3 per cent in the third quarter. Overall, domestic demand grew at a more moderate pace, with the sustained growth in private sector activity more than offset by the slower growth in public spending. Private consumption grew by 6.4 per cent versus 6.3 per cent in the second quarter, supported by continued wage and employment growth as well as the increase in minimum wage effective July 1, 2016. "Private investment registered a growth of 4.7 per cent in the third quarter (2Q 2016: 5.6 per cent), supported primarily by continued capital spending in the services and manufacturing sectors." Muhamad said. Growth in public consumption moderated to 3.1 per cent during the quarter (2Q 2016: 6.5 per cent) due to lower spending on supplies and services, which partially offset the higher spending on emoluments. Muhammad said public investment growth, however, contracted by 3.8 per cent (2Q 2016: 7.5 per cent), attributable mainly to lower spending on fixed assets by the Federal Government. On the supply side, he said, growth in the third quarter was supported mainly by the services and manufacturing sectors, while the agriculture sector remained weak. The expansion in the services sector was underpinned primarily by private consumption activity, while growth in the manufacturing sector was supported by export-oriented industries, said Muhammad. In the construction sector, growth continued to be driven by civil engineering activity, while the mining sector expanded at a faster pace on account of higher crude oil production. Growth in the agriculture sector, however, remained in contraction, attributable largely to the lagged impact of El Niño on crude palm oil yields. As at end-October, Malaysia's total external debt amounted to US$197.34 billion (RM865.3 billion) or equivalent to 70.2 per cent of Gross Domestic Product (GDP), while international reserves totalled US$97.8 billion. Looking ahead, overall global economic conditions will likely continue to be challenging, with subdued growth prospects despite unprecedented easing of monetary conditions in major and regional economies. The pace of expansion in the advanced economies is expected to remain modest, while in Asia domestic demand will continue to underpin growth. He said downside risks remain high, arising from the uncertainties over the timing and outcome of the UK-EU negotiations following the UK’s EU referendum, persistence of low energy and commodity prices as well as possible disorderly market conditions arising from policy shifts in major economies. Hence, the Malaysian economy is expected to expand by 4.0-4.5 per cent in 2016 with domestic demand, particularly private sector activity, continuing to be the key driver of growth. -- BERNAMA