Friday, May 14, 2010

Malaysia's Highest Q1 Growth Since 2000

PUTRAJAYA: The Malaysian economy recorded a robust growth of 10.1% in the first quarter of 2010, the highest first quarter growth since the 11.7% recorded in 2000.

Prime Minister Datuk Seri Najib Tun Razak said that given the robust performance this year and the government-introduced economic transformation initiatives, he was confident Malaysia would achieve its target of 6% growth this year.

Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz also announced a slight increase in the interest rate to counter any spike in inflation following the high growth. The Overnight Policy Rate was increased by 25 basis points to 2.5%.

She said the new level of the OPR would continue to be “accommodative and supportive of the economic growth.”

Najib, who announced the first quarter GDP at a press conference at his office here, said the growth in the first three months of this year was much higher than the 4.4% growth registered in the fourth quarter of last year.

Najib said the growth was spurred by strong domestic demand and global economic recovery.

He said this was also in step with the positive growth seen in other regional and emerging economies like China (11.9%), South Korea (7.8%) and Indonesia (5.7%).

“On the supply side, all major sectors recorded robust growth, particularly the manufacturing sector which grew by 16.9% compared to the 5.0% in the last quarter of 2009.

“Growth in this sector was driven by the electric and electronics (25.9%), transport equipment (25.3%) as well as wood products and furniture (18.7%) sub-sectors,” he said.

Najib said the services sector also registered a strong performance at 8.5%, compared to 5.2% in the previous quarter.

He said this was because of strong growth in the utilities (16.6%), real estate and business services (14.2%), wholesale and retail (9.6%) and the transport and storage (9.2%) sub-sectors.

He said the construction sector continued to expand with a 8.5% growth while the mining sector also seemed to have turned around to record a 5.2% growth.

He said the agriculture sector too expanded by 6.8%, mainly due to higher production of rubber, livestock and timber.

“On the demand side, growth during the first quarter of this year was underpinned by strong domestic expenditure stemming from sustained expansion in private and public consumption of 5.1% and 6.3% respectively.

“Investments too grew strongly at 5.4%, reflecting a recovery in investor confidence,” he said.

Najib said the external sector registered a sterling performance with a 19.3% increase in total exports, amidst recovery in the global economy and trade.

Similarly, he said, total imports expanded by 27.5% on account of higher imports of intermediate (37.9%), consumption (18.5%) and capital goods (9.6%), pointing to a more robust domestic economic activities.

Asked on Government’s plans to roll back subsidies, Najib said the government commitment to reduce subsidies would be implemented on a gradual basis.

He said the Government would take care of the vulnerable groups and make any transition as painless as possible.

On whether more subsidies would be rolled back, Najib said: “What is important is ensuring a strong, robust recovery and that any savings are used for productive investments.”

Later, Najib tweeted that the GDP growth meant more and better jobs for Malaysians.

“Government is committed to ensuring economic recovery and transformation is on the right track,” he added.

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