By NG MIN SHEN / TMR file pix
Malaysia’s economy expanded 4.4% in the third-quarter of 2018 (3Q18), driven largely by consumer and private sector spending.
Bank Negara Malaysia (BNM) said private consumption grew strongly following the zero-rating of the Goods and Services Tax (GST) during the quarter despite production shocks to the mining sector and weakness in the agriculture segment.
Headline inflation declined to 0.5% in the third-quarter, mainly reflecting the impact from the zero-rating of GST, while the implementation of the Sales and Service Tax (SST) beginning September 1 had a muted impact on inflation during the quarter.
Going forward, private sector activity will remain the key driver of growth amid the reprioritisation of public sector expenditure.
For the remainder of the year and going into 2019, a gradual recovery in commodity production will also provide support to growth.
“Malaysia is expected to register GDP growth of 4.8% for the full year 2018 and 4.9% in 2019,” BNM governor Datuk Nor Shamsiah Mohd Yunus said during a press briefing in Kuala Lumpur today.
She noted that in the absence of commodity shocks, the country’s GDP – which grew 4.7% in the first three quarters of 2018 – could have been between 0.5% to 0.7% higher.
“For the first three quarters of 2018, 82% of the economy grew by 6.2%. 17% of the economy, namely the agriculture, mining and quarrying sectors, contracted by 1.3%. The first three quarters were affected by supply shocks – it (the decline) has bottomed, so the growth trajectory would be on the upside moving forward,” she added.
Although annual average headline inflation is anticipated to be low in 2018, headline inflation is projected to increase primarily moving ahead, due to higher projected global oil prices and the prospective floating of domestic fuel prices.
“While the impact of the consumption tax policy will contribute to higher headline inflation in 2019, it will lapse towards the end of 2019,” Nor Shamsiah said.