Malaysia’s economy last year grew at 5.9 percent, beating earlier forecasts as the fourth quarter growth of 5.7 percent rounded up a year of increased activities in all major sectors.
The encouraging growth figure which was higher than the government’s earlier prediction of 5.8 percent compared with 5.2 percent in 2005 was marked by Malaysia’s impressive trade sector which chalked up a value in excess of RM1 trillion.
For this year, prospects remain favourable.
Releasing the gross domestic product figures here today, the Statistics Department said on the production side, the fourth quarter growth was boosted mainly by the sturdy growth of services and agriculture sectors.
Services, underpinned by higher expansion in finance, insurance, real estate and business services sub-sectors, grew by 7.0 percent in the fourth quarter, agriculture rose by 6.5 percent, manufacturing moderated to 4.3 percent, construction rose 0.6 percent and mining 1.9 percent.
Bank Negara Malaysia, in a separate statement, said the Q4 expansion was more broad-based with all sectors of the economy now recording positive growth.
The central bank said it was underpinned by stronger consumer sentiment and sustained business confidence, with the private sector the main contributor to growth supported by the external and public sectors.
The department said positive growths which were recorded across all the five main sectors of the economy translated to an eight percent growth in nominal prices.
In terms of final expenditure, growth was mainly driven by higher gross fixed capital formation expenditure and private consumption, the department said.
Value added in the agriculture sector continued to increase further by 6.5 percent, supported by the robust performance of the oil palm and rubber production, which expanded by 10.3 percent and 7.5 percent respectively.
Other activities in the agriculture sector, which includes fishing, forestry, livestock and other agriculture, collectively grew by 3.7 percent against two percent a year ago.
Higher commodity prices of oil palm from a year ago propelled the agriculture sector to attain a growth of 15.3 percent in nominal prices in the fourth quarter of last year, the department said.
For the mining sector, it rebounded to a positive growth of 1.9 percent after a period of declining growth in the past four quarters, supported by higher output of crude oil and natural gas.
The manufacturing sector moderated to 4.3 percent in the fourth quarter of 2006 due to a decline in demand for electrical and electronic products.
Bank Negara said the growth of the electronic and electrical (E&E) and the chemical industries moderated as external demand for laptops, computers and plastics moderated.
On the other hand, strong external demand for resource-based products supported the growth of the rubber, wood and petroleum industries, it said.
As for construction, it recorded a positive growth of 0.6 percent after 10 quarters of lacklustre performance.
The Statistics Department said exports, however grew at a slower rate of 4.1 percent compared to 10.5 percent last quarter, contributed by electrical and electronics products, palm oil and palm oil based products, crude petroleum, timber and timber based products and petroleum products.
At the same time, a similar trend could be seen in imports, which grew by 3.5 percent compared to 7.4 percent in the previous quarter, due largely on account of imports of intermediate goods.
On an annual basis, exports showed a growth of 6.3 percent while imports registered an increased of 7.2 percent in 2006, said the department.
Looking ahead, Bank Negara said prospects for Malaysia is expected to remain favourable this year.
While any moderation in the external economic conditions can affect the export sector, domestic demand, including both the private sector and public sector activity is expected to support the growth momentum of the Malaysian economy.
Sustained private consumption and continued expansion in investment activity are expected to provide solid support for the growth. This will be reinforced by the implementation of the Ninth Malaysia Plan projects which have already commenced in the fourth quarter of 2006, the central bank said.