Malaysia’s economic growth rose to double-digit in the third quarter, which was the biggest in more than a year, on base effects and robust domestic demand, official data showed on Friday.
Gross domestic product registered a sharp annual growth of 14.2 percent after expanding 8.9 percent in the second quarter, data released by Bank Negara Malaysia revealed. This was the biggest since the second quarter of 2021.
Nonetheless, the acceleration was driven by the lower base of comparison. The strong improvement was also seen in the prior quarter as the country moved towards endemicity and the reopening of international borders, the statistical office said.
On a quarterly basis, the economy expanded 1.9 percent, weaker than the 3.5 percent growth posted a quarter ago.
Overall, the Malaysian economy expanded 9.3 percent in the first three quarters of 2022.
Looking ahead, the central bank forecasts the economy to grow 4.0 percent- 5.0 percent next year.
Bank Negara Malaysia Governor Tan Sri Nor Shamsiah said, “The Malaysian economy will continue to be supported by firm domestic demand amid continued improvements in the labour market.”
“However, Malaysia’s growth remains susceptible to a weaker-than-expected global growth, higher risk aversion in global financial markets, further escalation of geopolitical conflicts and re-emergence of supply chain disruptions,” the governor added.
Capital Economics economist Shivaan Tandon said economic growth is set ease further over the coming quarters with lower commodity prices, weaker global demand and tighter monetary policy set to drag on prospects. The economist forecast the economy to grow just 3.5 percent next year.
The central bank said headline inflation is likely to have peaked at 4.5 percent in the third quarter. The acceleration was largely driven by the base effect from the discount on electricity bill implemented in the third quarter of 2021.
Inflation is expected to moderate in the fourth quarter of 2022, but remain elevated. Overall, headline inflation is projected to average at 3.3 percent this year.
By production approach, all sectors contributed to the GDP growth in the third quarter. The service sector grew at a faster pace of 16.7 percent after rising 12.0 percent. Likewise, manufacturing growth improved to 13.2 percent from 9.2 percent.
The mining and quarrying sector rebounded 9.2 percent after the 0.5 percent fall a quarter ago.
The construction sector expanded 15.3 percent, following a 2.4 percent rise. The agriculture sector turned around to 1.2 percent from a fall of 2.4 percent a quarter ago.
The expenditure-side breakdown showed that private final consumption expenditure that constituted 61.5 percent of GDP, climbed notably by 15.1 percent, but slower than the 18.3 percent rise in the second quarter.
Growth in gross fixed capital formation advanced to 13.1 percent from 5.8 percent. Similarly, government spending grew 4.5 percent after 2.6 percent increase.
Both exports and imports accelerated to 23.9 percent and 24.4 percent, respectively. Consequently, net exports turned around to 18.7 percent versus a decrease of 28.7 percent in the second quarter.
Another official data showed that the current account balance posted a higher surplus of MYR 14.1 billion in the third quarter, primarily driven by net exports of goods and lower deficit in services. The current account surplus increased from MYR 4.4 billion in the second quarter.
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