KUALA LUMPUR: Sustained expansion in domestic demand and continued robust growth in external demand drove the country's economy to register a strong 8.9% growth in the second quarter of 2010, said Bank Negara Malaysia.
The stronger domestic demand was due to higher private and public sector spending, while the expansion in external demand spurred domestic production.
On the supply side, major economic sectors continued to record strong growth during the quarter, led by the manufacturing and services sectors.
In a statement Wednesday, Aug 18, Bank Negara said the Malaysian economy recorded a strong and broad-based expansion in the second quarter, supported by improving domestic demand and robust external demand, especially from the regional economies.
'Going forward, the domestic economy is expected to remain strong, sustained by robust private sector demand.
'While external developments may result in a moderation in the pace of growth, favourable employment conditions, sustained consumer and business sentiments, moderate inflation and an accommodative policy environment are expected to encourage domestic economic activity, while external demand would continue to be supported by regional demand,' it said.
Bank Negara said that during the second quarter, domestic demand expanded by 9% (1Q2010: 5.3%), due mainly to higher private consumption and continued improvements in both business and public sector spending.
Private consumption grew by 7.9% (1Q2010: 5.1%), supported by the favourable labour market conditions, relatively low inflation and a steady increase in income levels amid sustained consumer confidence.
The public sector contributed positively to growth, with public consumption expanding by 6.9% during the quarter, following higher expenditure on emoluments.
Gross fixed capital formation also increased, registering a stronger growth of 12.9% (1Q2010: 5.4%), supported by further improvement in private sector investment activity and sustained public sector capital expenditure.
Private sector capital spending continued to benefit from the relatively strong increase in domestic production and exports. Public sector capital expenditure provided additional impetus to the domestic economy, with development expenditure disbursed mainly to the education and transportation sectors.
On the supply side, major economic sectors registered strong expansion during the second quarter, driven by the manufacturing and services sectors, said Bank Negara.
The manufacturing sector expanded at a sustained pace of 15.9% (1Q2010: 17%), with broad-based growth across all clusters.
The services sector grew strongly by 7.3% (1Q2010: 8.5%), supported mainly by the strong performance of the wholesale and retail trade; finance and insurance; and transport and storage sub-sectors.
The CONSTRUCTION [] sector expanded by 4.1% during the quarter (1Q2010: 8.7%), supported mainly by the strong growth in the non-residential sub-sector.
Growth in the agriculture sector moderated to 2.4% (1Q2010: 6.8%) due to lower production of industrial crops, while the mining sector registered a growth of 1.9% (1Q2010: 2.1%) supported by higher production of natural gas amid lower production of crude oil.
On the outlook for the year, Bank Negara said the strengthening domestic demand was to support growth in the second half of this year.
It said the recovery of the global economy was uneven in the second quarter as the sovereign debt crisis in the eurozone escalated.
Major advanced economies achieved a moderate recovery following improvements in private sector demand, but consumer and business sentiments eased towards the latter part of the quarter given the uncertainties arising from the sovereign debt crisis in several economies, it said.
Meanwhile, most regional economies continued to sustain strong growth in the second quarter, supported by robust domestic and external demand.
Going forward, there is increased risk of a moderation in the global growth momentum following rising concerns over the ongoing sovereign debt crisis and the planned fiscal consolidation in several advanced economies, it said.
The stronger domestic demand was due to higher private and public sector spending, while the expansion in external demand spurred domestic production.
On the supply side, major economic sectors continued to record strong growth during the quarter, led by the manufacturing and services sectors.
In a statement Wednesday, Aug 18, Bank Negara said the Malaysian economy recorded a strong and broad-based expansion in the second quarter, supported by improving domestic demand and robust external demand, especially from the regional economies.
'Going forward, the domestic economy is expected to remain strong, sustained by robust private sector demand.
'While external developments may result in a moderation in the pace of growth, favourable employment conditions, sustained consumer and business sentiments, moderate inflation and an accommodative policy environment are expected to encourage domestic economic activity, while external demand would continue to be supported by regional demand,' it said.
Bank Negara said that during the second quarter, domestic demand expanded by 9% (1Q2010: 5.3%), due mainly to higher private consumption and continued improvements in both business and public sector spending.
Private consumption grew by 7.9% (1Q2010: 5.1%), supported by the favourable labour market conditions, relatively low inflation and a steady increase in income levels amid sustained consumer confidence.
The public sector contributed positively to growth, with public consumption expanding by 6.9% during the quarter, following higher expenditure on emoluments.
Gross fixed capital formation also increased, registering a stronger growth of 12.9% (1Q2010: 5.4%), supported by further improvement in private sector investment activity and sustained public sector capital expenditure.
Private sector capital spending continued to benefit from the relatively strong increase in domestic production and exports. Public sector capital expenditure provided additional impetus to the domestic economy, with development expenditure disbursed mainly to the education and transportation sectors.
On the supply side, major economic sectors registered strong expansion during the second quarter, driven by the manufacturing and services sectors, said Bank Negara.
The manufacturing sector expanded at a sustained pace of 15.9% (1Q2010: 17%), with broad-based growth across all clusters.
The services sector grew strongly by 7.3% (1Q2010: 8.5%), supported mainly by the strong performance of the wholesale and retail trade; finance and insurance; and transport and storage sub-sectors.
The CONSTRUCTION [] sector expanded by 4.1% during the quarter (1Q2010: 8.7%), supported mainly by the strong growth in the non-residential sub-sector.
Growth in the agriculture sector moderated to 2.4% (1Q2010: 6.8%) due to lower production of industrial crops, while the mining sector registered a growth of 1.9% (1Q2010: 2.1%) supported by higher production of natural gas amid lower production of crude oil.
On the outlook for the year, Bank Negara said the strengthening domestic demand was to support growth in the second half of this year.
It said the recovery of the global economy was uneven in the second quarter as the sovereign debt crisis in the eurozone escalated.
Major advanced economies achieved a moderate recovery following improvements in private sector demand, but consumer and business sentiments eased towards the latter part of the quarter given the uncertainties arising from the sovereign debt crisis in several economies, it said.
Meanwhile, most regional economies continued to sustain strong growth in the second quarter, supported by robust domestic and external demand.
Going forward, there is increased risk of a moderation in the global growth momentum following rising concerns over the ongoing sovereign debt crisis and the planned fiscal consolidation in several advanced economies, it said.
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