Malaysia's Q1 GDP expands 5.6 per cent; exceeds forecast

Shoppers at the Aeon Bukit Indah Shopping Centre in Johor Bahru on March 31, 2015, a day before the Goods and Services Tax kicked in on April 1. Malaysia's economy grew 5.6 per cent in the first quarter of the year, faster than expected largely due t
Shoppers at the Aeon Bukit Indah Shopping Centre in Johor Bahru on March 31, 2015, a day before the Goods and Services Tax kicked in on April 1. Malaysia's economy grew 5.6 per cent in the first quarter of the year, faster than expected largely due to stockpiling by households before the GST rollout. -- PHOTO: ST FILE

 Malaysia's economy grew 5.6 per cent in the first quarter of the year, faster than expected largely due to stockpiling by households before the April 1 rollout of the Goods and Services Tax (GST).

The central bank said on Friday that private sector consumption grew by 8.8 per cent year-on-year as compared to the 7 per cent averaged across 2014.

"Net exports registered negative growth of 10.2 per cent. This means domestic demand was the main driver of growth," Bank Negara governor Zeti Akhtar Aziz told reporters.

She said households had spent in advance of the new broad-based consumption tax and spending on relief for victims of floods that devastated the east coast at the end of last year also supported domestic spending.

Tan Sri Zeti added that given the stockpiling ahead of GST, "some moderation" in consumption was expected for the rest of the year.

But "we see it as transitory and temporary. We believe because of the steady rise in income and wages, and low unemployment of 3 per cent, we expect consumption will resume", she said at the news conference.

Ms Zeti also said that the centrak bank had already priced in moderating consumption into its GDP projections for the year.

She said the first quarter was better than expected, as Malaysia aims to hit 4.5 to 5.5 per cent growth for the year.