Malaysia's economy sustained at 8.2%

Malaysia's economy sustained at 8.2%

KUALA LUMPUR (AFP): Malaysia's economy grew a robust 8.2 percent in the first quarter on the back of buoyant manufacturing activity and higher exports, the central bank said yesterday.

The country also logged the biggest quarterly trade surplus since 1993, reversing a deficit from the previous quarter, Bank Negara said in its report on the economy's performance in the three months to March.

The gross domestic product (GDP) growth, indicated in preliminary estimates, was unchanged from the previous quarter but eased a shade from 8.3 percent in the corresponding period last year.

"The growth momentum was supported mainly by sustained domestic activity in the manufacturing, construction and services sectors while export demand recovered since early this year," Bank Negara said.

The central bank had earlier projected the country's economy, which has grown at an annual eight percent since 1987, would moderate to 7.8-to-8.2 percent this year.

Malaysia logged a trade surplus of two billion ringgit (US$800 million) compared to a deficit of 483 million ringgit in the previous quarter, the bank said.

It attributed the surplus, the largest recorded since the third quarter of 1993, to lower imports of intermediate and investment goods and stronger exports.

Bank Negara said growth remained high in the electronics sub- sector following a modest and gradual recovery in global demand for semi-conductors since late last year.

Output of the agriculture sector also expanded due to higher production of crude palm oil and a turnaround in cocoa output.

The bank said growth in the industry would be higher if indications of increased logging activity in East Malaysia on Borneo island due to clearing of forests for agriculture and hydroelectric projects were taken into account.

"However, this is a one-off activity given that Malaysia adheres to the policy of sustainable management," it said, adding that the increased logging would not affect underlying economic fundamentals.

Inflation rose at a more moderate rate of 3.1 percent in the first quarter, down from 3.3 percent in the previous quarter.

Bank Negara said interest rates were relatively stable in the first four months this year but the daily weighted three-month interbank rate rose sharply to 8.62 points on May 16 triggered by the baht crisis in Thailand.

The rates drifted downwards to 7.8 percent on May 28.

"The rise in short-term money market interest rates essentially reflected the shortage in ringgit in the market following speculative activity during this period. The current monetary policy remains unchanged," the bank said.

Bank Negara's international reserves totaled 72.2 billion ringgit at the end of March, sufficient to finance about 4.7 months of retained imports.