Malaysia’s economy expanded at a slower pace in the first quarter, largely on weak investment, official data showed Thursday.
Gross domestic product advanced 5.4 percent year-over-year in the first quarter, slower than the 5.9 percent rise in the fourth quarter, data from the Department of Statistics reported. The growth rate was forecast to moderate to 5.6 percent.
The economy grew 1.4 percent from the December quarter, when it rose by 1.0 percent.
Overall growth was underpinned by continued expansion in private sector activity and strong support from net exports.
The expenditure-side breakdown of GDP showed that private spending climbed 6.9 percent annually. Gross fixed capital formation eased to 0.1 percent from 4.3 percent a quarter ago.
At the same time, exports climbed 3.7 percent, while imports decreased 2 percent.
Looking ahead, the central bank said growth is expected to remain favorable this year, with domestic demand continuing to be the key driver of growth.
Headline inflation is projected to average 2-3 percent in 2018, due to a smaller contribution from global cost factors and a stronger ringgit exchange rate compared to 2017.
After last week’s general election, the new government that formed under the leadership of Mahathir Mohamad scrapped the Goods and Services Tax on Wednesday.
While today’s figures show that the new government inherits an economy in decent health, the scrapping of the GST and campaign pledges to review Chinese investment have made the outlook much more uncertain, economists at Capital Economics, said.
Another report showed that the balance of payments showed a surplus of MYR 15 billion in the current account for the first quarter compared to MYR 13.9 billion in the fourth quarter.
The financial account recorded a net inflow of MYR 15.2 billion versus MYR6.0 billion inflow a quarter ago.