Malaysia posts 5.9% GDP growth in 2017, expecting inflation to moderate in 2018

The Malaysian economy grew 5.9% in 2017, driven primarily by the private sector, the country’s central bank said Wednesday.

On a quarter-on-quarter seasonally adjusted basis, Q4’s GDP expanded 0.9%, compared with 1.8% in Q3. On the expenditure side, the performance was driven primarily by private final consumption expenditure.

While services, manufacturing and agriculture sectors were the anchor on the production side, all sector—except mining and quarrying—posted positive growth.

As exports saw a growth of 7.1% influenced by the moderation in external environment, imports expanded 7.4%.

While stronger growth since last year has fueled inflation concerns, the central bank raised interest rates in January for the first time in 2014. The central bank said growth this year will remain favorable and domestic demand will be a key driver.

Headline inflation moderated slightly to 3.5 per cent in Q4 as inflation in the housing, water, electricity, gas and other fuels and transport categories were lower.

Core inflation also declined during Q4 to 2.3%.

“The expected faster expansion in global growth would continue to benefit Malaysia’s exports, with positive spillovers to the domestic economic activity,” the central bank said. “Headline inflation is expected to moderate in 2018, reflecting a smaller contribution from global cost factors and a stronger ringgit compared to 2017.”