Malaysia Q2 GDP grows 4.9 per cent year-on-year, above forecast

PHOTO: The Straits Times

KUALA LUMPUR - Malaysia's economy grew more strongly than expected in the second quarter, despite sliding commodity prices and weak domestic consumption.

Gross domestic product (GDP) in the second quarter grew 4.9 percent from a year earlier. This was below the 5.6 percent annual pace in January-March but exceeded the median forecast of 4.5 percent for April-June in a Reuters poll.

"The Malaysian economy is expected to remain resilient in this challenging environment and expected to remain on a steady growth path," Bank Negara Malaysia Governor Zeti Akhtar Aziz told a news conference on Thursday.

The country's current account surplus narrowed to 7.6 billion ringgit (S$2.7 billion) in the second quarter from 10 billion ringgit in the first quarter.

The embattled ringgit did not move much after the second quarter GDP figures were announced. The dollar fell to 3.9945 ringgit from 4.000 after Zeti said there is no need for capital controls.

The ringgit is the worst performing emerging Asian currency this year, and has fallen to pre-peg 17-year lows.

Weiwen Ng, economist at ANZ, said the GDP data shows Malaysia's economic growth fundamentals "remain intact", citing June's strong performance in industrial production and firm trade surplus.

Malaysia implemented a consumption tax in April, a move which economists and retailers said hurt the second quarter growth numbers. Domestic demand had cooled following the introduction of the tax while a weaker ringgit also impacted prices of goods.