The Malaysian economy expanded 4.5% for the first quarter of 2019 (1Q19), mainly supported by firm private consumption as well as the rebound in the agriculture sector due to recovery in oil palm yields (The Edge Markets, 16 May). Meanwhile, the 2019 headline inflation is expected to average between 0.7% and 1.7%.

At a press conference held yesterday, the governor of Bank Negara Malaysia (BNM), Datuk Nor Shamsiah Mohd Yunus, said that private sector demand was expected to continue to be the main anchor of growth amid lower public sector spending, while the external sector is likely to grow marginally in tandem with modest global demand. BNM expects the Malaysian economy to grow between 4.3% and 4.8% this year.

Earlier, a poll among 22 economists by Bloomberg expected the median gross domestic product (GDP) growth to be 4.3% for the January-March period. An article from The Star (17 May) wrote that while the central bank’s governor described the first quarter growth as “commendable”, the country’s domestic investment performance has come under scrutiny.

In other sectors, the services sector grew 6.4% as compared to 6.5%  a year earlier.  The manufacturing sector grew 4.2% (1Q18: 5.2%) and the construction sector recorded a 0.3% growth (1Q18: 4.9%).  However, the mining and quarrying sector contracted by 2.1% in 1Q19 as compared to a decline of 0.6% in 1Q18.

Inflation and Ringgit Malaysia

This year, BNM expected the headline inflation to average between 0.7% and 1.7%, while core inflation is expected to remain stable, supported by the continued expansion in economic activity and the absence of strong demand pressures.

The ringgit appreciated by 1.4% against the US dollar, driven mainly by non-resident portfolio inflows amounting to RM13.5bil. However, since April, the ringgit has depreciated 2.2%, in line with most regional currencies, reflecting cautious investor sentiments in global financial markets (The News Straits Times, 16 May).

Source: Macquarie Research - 17 May 2019