By BERNAMA
Malaysia’s economy, which expanded by 5.1% in the fourth quarter of last year, supported by private sector demand and higher exports, chalked up a full year 4.7% growth from 5.6% in 2012, despite lingering fiscal uncertainties.
Bank Negara Malaysia said global economic activities improved in the fourth quarter amid gradual recovery in the major economies while growth across Asia continued as moderating domestic demand was offsetted by better export performance.
The economy in the first, second and third quarters expanded by 4.1%, 4.4% and 5.0%, respectively, the central bank said in a statement.
On the supply side, Bank Negara said major economic sectors grew further, supported by both domestic and trade activities.
On a quarter-on-quarter seasonally adjusted basis, the economy recorded a growth of 2.1% in the fourth quarter of 2013 compared with 1.7% in the previous quarter.
Releasing the eagerly-awaited fourth quarter gross domestic product (GDP) figures today, Bank Negara said private consumption growth remained high in the fourth quarter although the expansion pace moderated.
Household spending continued to be supported by stable employment conditions and sustained wage growth, especially in the domestic-oriented sectors, it said.
Growth in public consumption moderated to 5.1%, reflecting lower government spending on emoluments, it said.
Bank Negara said gross fixed capital formation grew by 5.8% led by robust private sector capital spending amidst a contraction in public investment growth.
Growth in private investment improved to 16.5% on account of higher capital spending in the services and manufacturing sectors.
Public investments declined by 2.7%, reflecting moderating capital spending by the public enterprises amid a smaller contraction in the federal government development expenditure.
On the supply side, growth was supported by major economic sectors.
“The services sector grew in tandem with improvements in trade and manufacturing activities. The manufacturing sector expanded further, supported by higher growth in both export-and domestic-oriented industries,” the central bank said.
The construction sector growth remained firm, underpinned by activities in the non-residential and residential sub-sectors.
However, the commodities sector weakened due to lower production of rubber, palm oil and crude oil.
As for the headline inflation rate, measured by the annual change in the Consumer Price Index (CPI), it increased to 3.0% in the fourth quarter, largely reflecting the upward adjustments to prices of petroleum products and sugar, and the increase in excise duty on tobacco.
Supply disruptions following adverse weather conditions also led to higher food prices, the bank said.
The central bank said trade surplus widened to RM27.4 billion in the fourth quarter, with both gross exports and imports growing at a faster pace, largely reflecting improvements in the global economy and sustained expansion of domestic demand, respectively.
The financial account recorded a net outflow of RM9.7 billion in the fourth quarter as net inflows of direct investments were offsetted by outflows of other investments, the bank said.
The overall balance of payments registered a small deficit of RM2.9 billion in the fourth quarter.
The international reserves with Bank Negara amounted to RM441.7 billion (equivalent to US$134.9 billion) and this reserves level took into account the quarterly foreign exchange revaluation adjustments.
As at Jan 30, 2014, the reserves position amounted to RM436.0 billion (equivalent to US$133.1 billion), sufficient to finance 9.4 months of retained imports and is 3.4 times the short-term external debt, Bank Negara said.
The Overnight Policy Rate (OPR) was maintained at 3% during the fourth quarter of last year.
At the prevailing level of the OPR, monetary conditions remain supportive of economic activities, Bnak Negara said.
Total gross financing raised by the private sector through the banking system and the capital market increased to RM302.8 billion in the fourth quarter.
On the ringgit, Bank Negara said the movements of the ringgit and other regional currencies in the fourth quarter were driven mainly by external developments.
Overall, the ringgit depreciated by 0.7% against the US dollar during the quarter, it said.
The ringgit also depreciated against the pound sterling (-2.6%) and euro (-2.8%) but it appreciated against the Japanese yen (6.3%).
The ringgit also exhibited a mixed performance against regional currencies.
Between Jan 1, 2014 and Feb 10, 2014, the ringgit depreciated against the US dollar by 1.5%.
The ringgit also depreciated against the Japanese yen (-3.8%), pound sterling (-1.1%) and euro (-0.2%) and several regional currencies.
Bank Negara said despite continued volatility in global and domestic financial markets as well as challenging operating environment, the domestic financial system remained resilient throughout the fourth quarter.
The assessment of risks to financial stability showed financial intermediation continued to be well-supported by sound financial institutions, orderly financial market conditions and sustained confidence in the financial system, the bank said.
The banking system also continued to be well-capitalised, it said. Going forward, Bank Negara said the global economy is expected to be on a moderate recovery path.
The central bank said sustained improvements in the advanced economies will be a positive impulse for international trade.
However, the ongoing uncertainties surrounding monetary and fiscal policy adjustments in the advanced economies remain a risk to growth.
As for Malaysia’s economy, domestic demand would remain supportive of growth, Bank Negara said.
While domestic demand is expected to moderate following the ongoing fiscal consolidation, the external sector is expected to benefit from the improving global conditions, the central bank said.
Therefore, the growth momentum is expected to remain on a steady trajectory, it added.
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