GDP grew 4.9% in Q2

Bank Negara Malaysia governor Nor Shamsiah Mohd Yunus.

KUALA LUMPUR: The economy grew 4.9% in the second quarter of the year, supported by higher household spending and private investment.

Bank Negara Malaysia governor Nor Shamsiah Mohd Yunus said private sector demand was expected to remain the main anchor of growth amid lower public sector spending.

The growth was supported by the recovery from commodity supply disruptions and the improved performance in the manufacturing and construction sectors, she said in a press conference at Bank Negara to announce the second quarter growth results for 2019.

She also said headline inflation increased to 1.5% in June 2019.

“Headline inflation is expected to average higher in the second half of 2019, following the lapse in the impact of the goods and services tax zeroisation implemented in June 2018.”

Core inflation, excluding the impact of consumption tax policy changes, remained unchanged at 1.6%.

On the supply side, Nor Shamsiah said, there had been a rebound in the mining sector driven mainly by the recovery in natural gas output, while growth in the manufacturing sector improved marginally, supported by domestic-oriented industries.

The services sector continued to expand amid sustained growth in the wholesale and retail trade sub-sector, while the economy as a whole grew by 1.0%.

The ringgit depreciated in the second quarter by 1.5% against the US dollar, driven mainly by non-resident portfolio outflows as investor sentiments remain subdued amid a softening global growth outlook and escalations in trade tensions.

Nor Shamsiah said overall financing conditions are consistent with the current pace of economic expansion, with demand for financing showing some signs of improvement given the higher loan applications for the quarter.

“Steady loan disbursements across segments, including SMEs and the purchase of houses, continues to support economic activity.”

She said the economy is expected to remain on a steady growth path for the rest of the year, between 4.3% and 4.8%.

“Growth is expected to be supported by private sector activity and the external sector is likely to continue being affected by slower global growth amid ongoing trade tensions,” she said.