But it grew at slower pace in third quarter
Malaysiakini.com
Nov 23, 2006

The economy grew at a slower pace of 5.8 percent in the third quarter this year, from a revised 6.2 percent expansion in the previous quarter, the central bank announced on today.

Bank Negara's governor Zeti Akhtar Aziz said the economy in the months from from July to September continued to be steady, and that growth was mainly private-sector driven.

Growth was also supported by the manufacturing, services and agriculture sectors, she said.

"Growth will continue to be driven by domestic demand, both by private sector and public sector activity," Zeti told reporters.

Private consumption expenditure rose by 6.8 percent in the third quarter "supported by stable labour market conditions, stronger export earnings and firm commodity prices," she said.

The central bank, releasing revised figures, said the economy grew by 5.9 percent in the first quarter of 2006 and 6.2 percent in the second quarter.

For the first nine months of 2006, the economy grew by 6.0 percent from a 5.2 percent rise a year earlier.

Zeti said growth "could very well exceed" the 5.8 percent forecast for 2006 on the back of a robust economic environment.

"Going forward, we have a strong degree of confidence that the growth momentum will be sustained in the fourth quarter with at least 5.8 percent or better," she said.

Malaysia's economic growth hit 7.2 percent in 2004, but slowed to 5.2 percent in 2005.

The country has launched an ambitious 15-year industrial plan which targets brisk economic growth of 6.3 percent over the period with manufacturing seen as the main growth sector.

Inflation at moderate levels

Bank Negara said its monetary policy would continue to support steady growth in the domestic economy, with inflation expected to moderate for the rest of the year.

Inflation struck 4.8 percent in March, the highest level in six years, after the government introduced steep hikes in fuel prices in February.

"Inflation has peaked in March 2006 but the risk of inflationary pressure have subsided as the world oil prices has cooled down," Zeti said.

Overnight policy rates remained unchanged at 3.50 percent in the third quarter.

For the third quarter, manufacturing activities expanded by 7.1 percent year-on-year, compared with 3.5 percent growth in the same period last year, on the back of the expansion in both the export and domestic-oriented sectors.

Growth in the services sector slowed to 6.5 percent year-on-year in the third quarter against 7.3 percent growth a year earlier.

The agriculture sector recorded growth of 6.2 percent year-on-year against 1.5 percent in the same period last year.

The mining sector remained steady at negative growth of 1.2 percent in the third quarter while the decline in the the construction sector was marginal at 0.4 percent in third quarter from 1.4 percent in the same period last year.
    
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