Malaysia's Economy Grew More Than Expected in First-Quarter -- Update

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05/16/2019 | 05:45 am


By Yantoultra Ngui



KUALA LUMPUR--Malaysia's economy grew more than expected in the first-quarter, supported by a rebound in the agriculture sector.



Gross domestic product in the January-March period climbed 4.5% from a year earlier, Malaysia's central bank said Thursday. The growth was slower than 4.7% recorded in the fourth-quarter, but higher than the median forecast of 4.3% in a poll of 11 economists by The Wall Street Journal.



The latest GDP data comes as trade-dependent Malaysia faces challenging growth prospects amid renewed trade tensions between the U.S. and China, two of its major trade partners.



Last week, Bank Negara Malaysia cut interest rates, the first time since 2016, as part of its effort to help the nation weather the difficult global economic environment.



Since coming to power about a year ago, Prime Minister Mahathir Mohamad's coalition has abolished an unpopular goods-and-services tax, reinstated a narrower sales-and-services tax and reintroduced fuel subsidies. Still, Malaysia's economic growth has moderated.



On a sequential basis, Malaysia's economy grew 1.1% on-quarter on a seasonally-adjusted basis in the first-quarter.



"The rebound in the agriculture sector on account of strong recovery in oil palm yields provided an additional lift to growth," Bank Negara Malaysia's governor Nor Shamsiah Mohd Yunus told reporters.



The central bank maintains its March projection of economic growth ranging between 4.3% and 4.8% this year, she said, but added that risks to the outlook remained tilted to the downside, mainly emanating from external factors.



Exports grew 0.1% in the first-quarter, slowing from a rise of 3.1% in the fourth-quarter, on weaker external demand, the data showed. Imports dropped 1.4%, reversing from a 1.8% climb in the previous quarter.



The services sector, which accounts for more than half of Malaysia's GDP, rose 6.4% in the first-quarter, versus an expansion of 6.9% in the fourth-quarter.



Manufacturing activity climbed 4.2%, weakening from a growth of 4.7% in the fourth-quarter. The construction sector climbed 0.3%, decelerating from an expansion of 2.6% in the previous quarter, data showed.



The agriculture sector jumped 5.6%, reversing from the contraction 0.1% in the fourth-quarter. Mining and quarrying fell 2.1% in the first-quarter, worsening from the 0.7% drop recorded in the fourth-quarter.



The country's current-account surplus widened to 16.4 billion ringgit ($3.94 billion) in the first-quarter from MYR10.8 billion in the previous quarter.



Separately, Bank Negara Malaysia today also announced six new initiatives to enhance market liquidity and accessibility given the possibility that Malaysian government debt could be dropped from the FTSE World Government Bond Index due to concerns over market liquidity.



The initiatives range from enhancing the delivery mechanism for Malaysian government securities future settlements to expanding dynamic hedging program to include trust banks and global custodians, the central bank said.





Write to Yantoultra Ngui at yantoultra.ngui@wsj.com





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