BANK Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz is confident that the economy will meet the 5.5 to six per cent growth target this year, after posting a 5.6 per cent growth in the third quarter from a revised 6.5 per cent in the second quarter.
“It remains to be a much improved growth performance compared to before, due to the strong first half,” she said when releasing details on the third quarter performance yesterday.
On a quarter-on-quarter seasonally adjusted basis, the economy grew 0.9 per cent.
Economic activities between August and September were supported by private sector demand and growth in goods and services, while positive growth was experienced across all economic sectors, including services, construction and agriculture, in the third quarter.
The manufacturing sector expanded at a more moderate pace amid slower domestic-oriented activity.
Zeti said consumption was supported by stable labour market conditions and continued wage growth.
On the five to six per cent growth outlook for next year, she said export performance would decide which end of the range the economy was likely to be in.
“While risks to growth have increased, the Malaysian economy is expected to remain on a steady growth path.”
Although exports would benefit from the recovery in advanced economies and from regional demand, the trend was likely to moderate, reflecting both the high base effect from last year and lower commodity prices, Zeti added.
She warned of a considerable downside risk to global growth.
Commenting on the third-quarter results, OCBC Bank economist Wellian Wiranto said at 2.9 per cent of gross domestic product (GDP), the current account surplus looked “less comforting” than the 6.9 per cent in the first half.
“Against a backdrop of crude oil price slump, these data come at a rather inconvenient time for oil-exporting Malaysia.
“We think growth will be supported by domestic demand, but the downside risks will keep policymakers more preoccupied.”
But the latest third-quarter GDP figures were hardly something to lose sleep over, he said.
Bank of America Merrill Lynch economist Dr Chua Hak Bin said the narrowing surplus was largely due to wider deficits in the services, primary and secondary income accounts.
The goods trade account had a healthy surplus of RM28.7 billion in the third quarter.
While the overall balance of payments registered a wider deficit of RM6.7 billion, he said it was largely driven by the smaller current account surplus and an RM11.6 billion outflow under “net errors and omissions”.
Chua said the research house had lifted its full-year growth forecast slightly to 5.8 per cent (from 5.7 per cent).
It also pencilled in a 25-basis point interest rate hike in mid-2015 following the implementation of the six per cent Goods and Services Tax in April.
