Malaysia’s Economy Expands 8.9% in the Second Quarter, Fastest Pace in a Year

Malaysia's economy grew at the fastest pace in a year, powered by a surge in consumption underpinning the recovery of services and manufacturing, giving the central bank more scope to fight inflation.

Bank Negara Malaysia reported that the gross domestic product expanded in the second quarter. That is better than the median growth in the survey. In the first quarter, output increased by 3.5% against a median estimate of 1%.

The Malaysian economy is gaining traction due to easing of mobility restrictions, lower unemployment and higher commodity prices. The governor of the central bank said at a news conference on Friday that the government now expects full-year GDP growth to be at the upper end of its forecast.

The governor said that monetary policy continues to be accommodative after raising the policy rate by 50 basis points.

Measured, Gradual

Shamsiah said that any changes to monetary policy would be gradual. She said that rate adjustments would manage the risk of excessive demand.

Analysts from Maybank Securities said before the GDP print that rising price pressures from the reopening may support another quarter-point rate hike in September.

Private consumption increased by 18.3% in the second quarter, compared to the 5.5% growth in the first quarter. The services sector grew 12% in the second quarter, faster than in the first, while manufacturing grew 9%.

The moderation in growth in the second half of the year will be offset by the domestic consumption and investment tailwinds. She said they are sticking to their forecast.

Kevin Varley, Cecilia Yap, and Y-Sing Liau helped with the project.