LAST_UPDATESun, 22 Jul 2018 3pm

Malaysia Economy Expanded 5.4pc For Q1

KUALA LUMPUR: The Malaysian economy grew by 5.4 per cent in the first-quarter (Q1) of 2018, underpinned by continued expansion in private sector activity and strong support from net exports.

Bank Negara Malaysia (BNM) said from the supply side, all economic sectors expanded.

On a quarter-on-quarter seasonally-adjusted basis, the economy grew 1.4 per cent in Q1 2018 from 1.0 per cent in Q4 2017.

Headline inflation declined to 1.8 per cent in Q1 2018 from 3.5 per cent in Q4 2017, reflecting the smaller contribution of domestic fuel prices.

According to BNM, the inflation was due to the smaller increase in global oil prices compared to the previous quarter and a stronger ringgit exchange rate in Q1 2018.

The central bank also highlighted domestic financial market conditions remained orderly despite heightened volatility arising from external developments.

“Domestic financial institutions demonstrated resilience with healthy asset quality, sound profitability and ample liquidity.

“Credit intermediation activities remained supportive of real economic activities with businesses and households maintaining sound debt servicing capacity.”

BNM said the Malaysian economy is expected to remain on a favourable growth path in 2018 with domestic demand continuing to be the key driver of growth.

“Growth prospects are further supported by continued positive spillovers from the external sector to domestic economic activity.”

The central bank pointed out headline inflation is projected to average between two per cent and three per cent in 2018, due to a smaller contribution from global cost factors and a stronger ringgit exchange rate compared to 2017.

Underlying inflation, as measured by core inflation, is also expected to remain small, due to smaller cost pass-through to retail prices compared to 2017.

The Bank also outlined three issues - one on Trade Disputes: Implications for Trade and Investments – whereby the central bank assesses the potential impact and policy implications from recent potential trade measures announced by the US and PR China (arising on both the global and Malaysian economy).

It said a key policy consideration includes pursuing reforms to ensure domestic demand remains resilient to mitigate any external shocks to the economy.

The second – 'Global Slack as a Determinant of Inflation – looks into the influence of the factors associated with globalisation on inflation dynamics in Asia-Pacific economies.

It highlights the growing challenges faced by monetary authorities in forecasting and managing inflation when it is increasingly influenced by global factors.

The third – 'Improving Quality and Transparency of Services to Financial Consumers' – highlights to the public, initiatives taken by the financial industry in collaboration with the Bank to improve the quality and transparency of customer services.

BNM said these initiatives include setting sector-wide customer service standards for the banking sector and conducting a Customer Satisfaction Survey to assess consumers’ actual banking experiences.

-New Straits Times