KUALA LUMPUR: Malaysia’s economy expanded at a better-than-expected 5.8 percent in the last quarter of 2014 thanks to strong domestic demand, the central bank said Thursday, helping the country to its best annual performance in four years.
The news will come as welcome relief for the government, which has recently unveiled measures to help the petroleum-exporting country cope with the recent plunge in global oil prices.
The October-December growth in Southeast Asia’s third biggest economy was better than the 5.6 percent tipped by analysts in a Bloomberg News survey. The annual rate of 6.0 percent also surpassed the 5.8 percent forecast and was the best performance since 7.4 percent growth in 2010.
Bank Negara said “domestic demand remained the anchor of growth in the fourth quarter,” with analysts pointing to solid performances in the construction, services and manufacturing sectors.
“The Malaysian economy is expected to remain on a steady growth path,” the central bank said. “The gradual recovery in global growth will lend support to manufactured export performance, although overall export growth would likely remain modest amid lower commodity prices.”
Economists have tipped growth to slow this year owing to plunging price of oil and other commodities as well as weakness in key overseas markets including China, Europe and Japan.
“This year we will see a slower growth of about 5.1 percent because of weak oil and commodity prices. The uncertainty in the global economy including in major Asian economies could also hurt . . . exports,” Kenanga Research economist Wan Suhaimi Saidi told Agence France-Presse.
Malaysia trimmed its 2015 growth forecast to a 4.5 percent to 5.5 percent, from an earlier projection of up to 6 percent in response to the sharp fall in oil prices.
The World Bank also recently shaved its 2015 GDP growth forecast for Malaysia to 4.7 percent from an earlier 4.9 percent, still enviable but off the historic pace for the Southeast Asian “tiger” economy.
Malaysia derives 30 percent of state income from energy exports, and the more than 50 percent drop in world oil prices since June has weighed heavily, dragging the ringgit to around six-year lows against the dollar and rattling investors.
In a bid to shield the economy from the plunging crude prices Prime Minister Najib Razak’s government recently unveiled a series measures to boost trade, tourism, investment, and domestic consumption while reducing business costs.
He also said hundreds of millions of dollars would be allocated for recovery efforts in parts of the north devastated by floods last year.