Highlight Malaysia 2Q GDP grows 6.4% year as exports, domestic demand rise

by **Cals** Sat 16 Aug 2014, 00:35

Highlight Malaysia 2Q GDP grows 6.4% year as exports, domestic demand rise

Business & Markets 2014

Written by Shalini Kumar and Gho Chee Yuan of theedgemalaysia.com

Friday, 15 August 2014 13:11

KUALA LUMPUR (Aug 15): Malaysia's gross domestic product (GDP) grew 6.4% in the second quarter of this year (2Q14) from a year earlier, underpinned by higher exports and domestic demand, according to Bank Negara Malaysia.

In a statement today, Bank Negara said growth in major domestic economic sectors had also supported GDP expansion.

Bank Negara said domestic demand rose 5.7% while exports climbed 8.8%.

On the supply side, the agriculture and mining sectors grew 7.1% and 2.1% respectively while the manufacturing and construction segments expanded 7.3% and 9.9% respectively. The service sector grew 6%.

Cumulative first-half GDP expanded 6.3%. In quarterly terms, 2Q14 GDP rose 1.8% from the preceding 1Q14.

Malaysia's 2Q14 year-on-year (y-o-y) GDP growth of 6.4% compares to the 6.2% y-o-y expansion in 1Q14.

Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz told reporters today the 2Q14 GDP growth was driven by higher exports and a strengthening private sector activity.

"Exports were stronger than expected at 8.8%, boosted by the double-digit growth in goods.

"We expect the overall growth for the year to exceed earlier projections of GDP growth. If there are any upward revisions to be made, it will be announced during the budget speech in October," Zeti said.

Looking ahead, Zeti said export growth was expected to moderate in the second half of the year, partly reflecting the significant base effect in the corresponding period in 2013.

Inflation, as measured by the consumer price index (CPI), is seen rising. Zeti said the CPI would rise temporarily next year due to the proposed price adjustments in the country.

However, inflation was seen stabilising to the long-term average rate of about 3% in 2016, according to her.

Malaysia is expected to introduce the goods and services tax (GST) on April 1 next year. But policy makers have yet to release the full list of zero-rated and exempted goods.

Today, Zeti, however, said the GST was not expected to have a significant impact on the nation's GDP growth next year.

In 2Q14, the CPI rose 3.3%. This compares to the 3.4% rise in 1Q14.