by NG MIN SHEN & FARA AISYAH
Malaysia’s economy grew 4.5% in the second-quarter of 2018 (2Q18), lower than the estimates of around 4.9%.
Bank Negara Malaysia (BNM) governor Datuk Nor Shamsiah Mohd Yunus (picture) said the slower growth was due to commodity-specific shocks in the mining and agriculture sectors, while the services and manufacturing sectors remained key drivers of the economy.
The mining sector was mainly affected by declining natural gas production due to supply outages in East Malaysia, while the agriculture sector was hit by weak crude palm oil (CPO) production impacted by supply constraints and adverse weather conditions.
Headline inflation declined to 1.3% in the April-June period from 1.8% in 1Q18, largely due to the zero-rated Goods and Services Tax (GST) but higher transport costs added pressure to prices of goods.
The fixing of RON95 fuel prices since March 22 this year helped to contain further increases in fuel inflation during the quarter.
The central bank has lowered the country’s growth projection for the whole year to 5% from its previous projection of between 5.5% to 6%, on anticipation for prolonged disruptions in oil and gas production and low production in agriculture.
“Malaysia’s economic growth is confined to specific sectors and not generalised throughout the economy. Growth remains firm and Malaysia remains one of the fastest-growing economies in the region,” Nor Shamsiah said.
Going forward, the central bank expects growth momentum to be supported by sustained global growth, while global trade momentum will support trade activity.
Private sector spending is expected to benefit from continued positive spillovers from external demand, with recent indicators also pointing to improvements in business confidence and consumer confidence.
Household spending will be supported by favourable labour market conditions as well as additional spending from the tax holiday.
“Malaysia remains on a steady growth path for 2018 and 2019, supported by strong macroeconomic fundamentals and sufficient buffers to withstand domestic and external shocks. The growth performance and economic fundamentals provide a window of opportunity for the country to embark on deeper structural reforms that will put Malaysia Baru on a solid economic footing,” Nor Shamsiah said.