Malaysia grows 5.6 percent in first quarter

Although weak exports pull first quarter growth rate down, Malaysian economy grows above expectations

Photo by: Reuters
Photo by: Reuters

Updated Jul 28, 2015

As it showed resilience in the atmosphere of weak energy prices and commodity exports, Malaysia’s economy grew 5.6 percent in the first quarter, beating forecasts.

After releasing the data, Bank Negara Malaysia's Governor Zeti Akhtar Aziz said the Southeast Asian economy was diversified enough to cope with the fall in prices for natural gas and oil. Malaysia is the world's second largest gas exporter and is still, if only just, a net exporter of crude.

"We remain resilient," Zeti told a news conference. "We will be affected by price movements of energy and fuel prices, but it's not going to devastate our economy."

Exports were subdued at the start of the year, but a surge in March, led by electronics, raised expectations that Malaysia's growth story remained intact.

Growth might have been slower than the previous quarter but for a surge in industrial activity and robust private consumption in March prior to the implementation of a new 6 percent goods and services tax (GST).

A bounce in oil prices from the 6-year lows seen in January has dispelled some of the earlier worries that Malaysia's current account surplus could dwindle to risky levels.

Data released on Friday showed the surplus bounced back to $2.8 billion in the first quarter from a revised $1.6 billion in the previous quarter.

Earlier fears that Malaysia could suffer heavy outflows of foreign capital once US rates rise has largely faded, and net outflows of portfolio investment fell to $2.2 billion in the first quarter, after a worrying outflow of $5.69 billion in the previous three months.