Malaysia's GDP expands 5.1% in Q4 last year

BUOYED by private-sector demand and an improved performance in exports, Malaysia's gross domestic product (GDP) expanded 5.1 per cent in Q4 last year, capping the overall growth figure for 2013 at 4.7 per cent.

While there have been concerns that the government's subsidy rationalisation measures could crimp spending, this was not reflected in the Q4 figures, which showed that consumer spending had not eased off yet.

Even so, the pace of expansion of private consumption eased to 7.3 per cent in Q4 from 8.2 per cent in the preceding quarter.

"Household spending continued to be supported by stable employment conditions and sustained wage growth especially in domestic-oriented sectors," Bank Negara, the central bank, said in a statement yesterday.

Growth in public consumption eased to 5.1 per cent from 7.1 per cent in the previous quarter. This was largely due to lower outlays for government emoluments.

Private investment continued to blaze away, registering growth of 16.5 per cent, up from 15.2 per cent in the previous quarter, thanks largely to Prime Minister Najib Razak's Economic Transformation Programme which sets great store on capital-intensive infrastructure works.

Public investment shrank 2.1 per cent against a smaller contraction in Q3, reflecting lower spending by public enterprises and the smaller development budget for the year.

On the supply side, all sectors, except for commodities, grew strongly. Commodities declined owing to the lower production of oil, palm oil and rubber.

What will concern the government is the headline inflation figure. The central bank said inflation during the last quarter jumped to 3 per cent from 2.2 per cent on the back of rises in fuel and sugar prices.

The trade surplus widened to RM27.4 billion (S$10.4 billion) in Q4. The good news is that the current account surplus on the country's balance of payments in 2013 was a comfortable RM37 billion, though that is considerably lower than the RM50 billion registered for 2012.

More disquieting was the fact that net outflows accelerated in Q4 to RM9.7 billion from RM1.5 billion in the previous quarter. The outflows could accelerate considerably this year as the US Federal Reserve's tapering effort quickens.

The central bank's international reserves stood at a comfortable US$133.1 billion at the end of January.

"While domestic demand is expected to moderate following the ongoing fiscal consolidation, the external sector is expected to benefit from the improving global conditions," noted Bank Negara. "The growth momentum is therefore expected to remain on a steady trajectory."