Malaysia: Resilient domestic demand spurs economic growth in second quarter
August 15, 2012
In the second quarter, GDP expanded 5.4% over the same period last year, which was above the 4.9% rise tallied in the preceding period and overshot market expectations that had the economy growing 5.0%. Economic growth was fuelled by buoyant domestic demand, which expanded 12.0% in the second quarter (Q1 2012: +9.3% year-on-year). Private consumption continued to gain some momentum and rose 8.8% (Q1: +7.4% yoy), while government spending increased 9.4% (Q1: +7.3% yoy). In addition, growth in gross fixed capital formation skyrocketed to an all-time record of 26.1% (Q1: +16.2% yoy), mainly due to government efforts to bolster investment, particularly infrastructures. On the external front, exports of goods and services continued to deteriorate, slowing from a 2.8% increase in the first quarter to a 2.1% rise in the second. On the other hand, imports accelerated to an 8.1% pace (Q1: +6.8% yoy). As a result, the external sector's net contribution to overall growth deteriorated from minus 3.0 percentage points in the first quarter to minus 5.0 percentage points in the second.