Source: MIDA e-News
Malaysia recorded a strong 10.1% gross domestic product (GDP) growth in the first quarter, the highest Q1 results over ten years, says Prime Minister Datuk Seri Najib Tun Razak.
In announcing the first quarter performance in Putrajaya on 13 May 2010, Datuk Seri Najib said the favourable growth together with the government's economic transformation programmes, the Malaysian economy could be looking at a 6% growth for the whole year.
Bank Negara Malaysia, earlier this year projected a 4.5% to 5.5% growth for this year.
The first quarter growth was attributed to robust domestic demand which expanded by 5.4% compared with 2.8% in the last quarter of 2009 as well as improvements in external demand brought about by the revival of the global economy.
All sectors of the Malaysian economy performed well in the first three months of the year, led by the manufacturing and services sectors.
The manufacturing sector recorded a double-digit growth of 16.9% as compared with 5.0% in the last quarter of 2009, supported by the strong recovery in the electronics and electrical (E&E) at 34.4%; transport equipment (25.3%) and wood products and furniture (18.7%) industries.
Services expanded by 8.5% from 5.2% in the fourth quarter of last year, supported by the better performance in all the sub-sectors-finance and insurance, wholesale and retail trade and real estate and business services.
The construction sector continued its growth momentum with a 8.7% growth (4Q 2009:9.3%) supported by the implementation of projects under the government's second stimulus package and the Ninth Malaysia Plan.
The agriculture sector also performed better with a 6.8% growth from a 5.9% in the last quarter. The expansion was attributed mainly to the higher production of industrial crops.
The mining sector turned around to record a positive 2.1% growth in the first quarter (4Q 09: -2.8%), due to a step up in the production of natural gas.
The country's trade surplus continued to trend up, recording a large surplus of RM39 billion in the first three months from RM32.4 billion in the previous quarter, as both gross exports and imports rose substantially by 30.8% and 35.1% respectively.
The higher exports were driven by the increase in external demand particularly for E&E products which rose 37.2% (4Q 2009: 1.8%) due to increased in demand for the semiconductor and audio-visual products from the region as well as a marked improvement in commodity exports, while the increase in gross imports was supported by the higher imports of intermediate goods to fuel the higher production in the manufacturing sector, which also brought about higher imports of capital goods.
On a cash basis, Malaysia's net foreign direct investments (FDIs) amounted to RM4.6 billion in Q1 (4Q 09: RM10.1 billion) and these investments were mainly in the manufacturing, services, and oil and gas sectors.
Meanwhile, net direct investment overseas by Malaysian companies in the first quarter was RM2.3 billion (4Q 09: -RM5.2 billion), due to the lower net extension of inter-company loans to subsidiaries abroad and lower outflows of equity capital.
These investments were mainly in the services sector, in particular the finance and insurance, business services and telecommunication sub-sectors.
Malaysia's international reserves as at 30 April 2010 stood at RM313.9 billion (US$96 billion), sufficient to finance 8.5 months of retained imports and is 4.4 times the country's short-term external debt.
Malaysia's sound banking system stayed resilient and financing conditions amid ample liquidity in the country remained supportive of economic activities, with funding for business and households growing at a higher rate in the first quarter.
In the first three months of the year, the ringgit appreciated by 4.6% against the US dollar, 12.2% against the euro , 11.5% against pound sterling and 5.9% against the Japanese yen.
Meanwhile, BNM at its Monetary Policy Committee (MPC) meeting yesterday, raised the Overnight Policy Rate (OPR) by 25 basis points to 2.50 %, with the floor and ceiling rates correspondingly higher at 2.25 % and 2.75 % respectively.
At the new OPR, the country's monetary policy continues to support growth in the domestic economy.
The strong first quarter performance in all sectors of the Malaysian economy points to a sustained recovery, with the expected continued growth in both domestic and external demand.
The positive employment situation, rising consumer and business confidence and a supportive and accommodative policy environment are expected to drive domestic demand while the overseas demand is expected to come from the rise in regional trade and the upturn in the global E&E industry.
Adapted from the New Straits Times and Star 14 May 2010 and BNM website