KUALA LUMPUR: Growth in Malaysia’s economy slowed to a “moderate” 5.6 percent in the third quarter as exports decelerated, the central bank said Friday, but it added that domestic demand was expected to support steady expansion.
Southeast Asia’s third-largest economy depends heavily on exports but in recent years has increasingly leaned on domestic demand as demand in key overseas markets stutters.
In the three months through September, private-sector activity “remained the key driver of growth,” while exports expanded at a “slower pace” of 1.5 percent, Bank Negara said.
The latest figure compares with 6.5 percent in the previous three months and 6.2 percent in January-March.
Third-quarter growth in 2013 was 5.0 percent.
“While risks to growth have increased, the Malaysian economy is expected to remain on a steady growth path,” Bank Negara said.
“Going forward, domestic demand will remain the key driver of growth.”
Inflation averaged 3.0 percent in the third quarter, down from 3.3 percent in the second.
Malaysia is planning to introduce a 6-percent goods and services tax next year, which economists say in necessary to help lower one of Asia’s highest debt-to-GDP ratios, but the plan remains controversial.
Thousands protested against the plan in an opposition-led rally in May, with many fearing it will burden ordinary consumers already struggling with rising prices after the government cut for subsidies of petrol and other goods.