November 17, KUALA LUMPUR – Malaysia is expecting gross domestic product (GDP) to grow by between 5.2 per cent and 5.7 per cent this year, mainly aided by the positive export sector and domestic demand, said Bank Negara Malaysia (BNM) Governor, Tan Sri Muhammad Ibrahim.
“The numbers are looking good with the export sector showing double-digit growth, and we really hope that there will be a pleasant surprise this year,” he said at a press conference following the release of the Economic and Financial Developments in Malaysia in the Third Quarter of 2017 report.
Muhammad, however, cautioned that the country should be mindful of external performance, which would not only affect Malaysia but globally.
The third-quarter results showed that the GDP had grown at a faster pace of 6.2 per cent compared with 4.3 per cent in the same quarter last year, thanks to domestic demand, particularly private sector spending.
From the supply side, the improvement was seen across all sectors – services, manufacturing, mining, agriculture and construction.
On the external front, he said exports would continue to benefit from the favourable global demand condition while inflation was expected to average at the upper end of the forecast range of 3-4 per cent for 2017 as a whole.
“For this year, we expect the inflation to still be within 3-4 per cent, depending on how global oil price is faring,” he said, adding the inflation moderated to 3.8 per cent due mainly to lower transport inflation.
Asked on the continued pressure from the higher cost of living faced by the people, Muhammad said the central bank noted that the economic growth was not felt by the people especially the lower income group.
“Our concern is more on totality, which includes creating better economic policy that create better paying jobs in the industry,” he said.
As for the foreign direct investment (FDI), he said Malaysia needed to look at initiatives that could be undertaken to help generate more income for the country and also be more competitive while adding value to certain sectors.
In the third quarter of 2017, the financial account registered a net outflow of RM1.2 billion as higher inflows of long-term FDI and sustained foreign inflows into domestic portfolio assets were offset by portfolio investments abroad by residents and outflows arising from banks’ liquidity and treasury management operations.
The direct investment account turned around to register a net inflow of RM6.2 billion (Q2 2017: net outflow of RM7.1 billion), as FDI inflows more than offset outflows of direct investments abroad during the quarter.
FDI increased to RM11.2 billion due mainly to higher injections of equity capital and reinvestment of earnings from parent companies.
The inflows were channelled into the real estate activities sub-sector, followed by mining and manufacturing sectors.
It was reported that Malaysia registered a GDP growth of 5.8 per cent in Q2 2017 and 5.6 per cent in Q1.