KUALA LUMPUR • Malaysia's economy grew at its fastest pace in two years during the first quarter, the central bank said yesterday, boosted by stronger domestic demand and a pick-up in exports.
South-east Asia's third-biggest economy expanded 5.6 per cent year on year in the January-to- March period, compared with 4.1 per cent in the same period last year and 4.5 per cent in October to December last year.
The result - much better than the 4.8 per cent forecast in a survey by Bloomberg News - marks the third consecutive quarter of improving growth. It is the fastest growth since the start of 2015, underlining positive news for the Malaysian government, which is expected to call for the general election this year.
"It's a lot stronger than expected and it was partly due to a rebound in exports and commodity prices," said CIMB Private Bank economist Song Seng Wun.
Bank Negara said growth would be sustained this year as the global economy showed signs of improvement, while domestic demand remained healthy.
"The economy is on track to register higher growth in 2017," Bank Negara said. "Domestic demand is projected to continue to expand. Exports are expected to benefit from the improvement in global growth."
According to the central bank, services, manufacturing and agriculture were the major drivers of the economy.
The services sector grew at a faster pace of 5.8 per cent, mainly led by wholesale and retail trade. Electrical, electronic and optical products like semiconductors and printed circuit boards drove growth in the manufacturing sector, while the agriculture sector was boosted by higher yields of oil palm fruit.
The figures come after export-reliant Malaysia recovers from years of falling oil prices and weak overseas demand.
The economy is forecast to grow between 4.3 per cent and 4.8 per cent this year, but Bank Negara said in March that rising protectionism remains a risk.
Growth hit 4.2 per cent last year, slowing from 5 per cent in 2015 and 6 per cent in 2014.
Meanwhile, headline inflation during the first quarter of this year was 4.3 per cent. The central bank explained that public perception of actual inflation tends to be higher, influenced by personal experiences.
AGENCE FRANCE-PRESSE, THE STAR/ASIA NEWS NETWORK