Malaysian Economy – Latest Update

Right from the oven, BNM released the 4^th quarter GDP numbers for Malaysia. The press release is slightly different this time, with the inclusion of two paragraphs on the events of the past two days in the financial markets.

Highlights (emphases added):

Sustained steady growth

The Malaysian economy continued to sustain steady growth in the fourth quarter, with real gross domestic product expanding by 5.7% in the quarter (3Q: 5.8%). The expansion was more broad-based with all sectors of the economy now recording positive growth. Underpinned by stronger consumer sentiment and sustained business confidence, the private sector was the main contributor to growth which was supported by the external and public sectors. For the whole year, real gross domestic product (GDP) expanded by 5.9%.

Which is slightly above expectation, and above the official forecast of 5.8% for 2006.

The Malaysian economy is expected to maintain a steady growth path in 2007

Going forward, global economic expansion is expected to be sustained at above 4% in 2007. …The economic growth prospects for Malaysia is expected to remain favourable for 2007. While any moderation in the external economic conditions can affect the export sector, domestic demand, including both the private sector and public sector activity is expected to support the growth momentum of the Malaysian economy. Sustained private consumption and continued expansion in investment activity are expected to provide solid support for the growth…

And notably, on the events of the past two days –

The diversified economic structure and the strengthened macroeconomic fundamentals, the more developed domestic financial markets and the sound financial sector are important factors that continue to support Malaysia’s economic flexibility and resilience to withstand external shocks. The developments in these two days in the global, regional and domestic financial markets reflect the potential for contagion. As a highly open and liberalized economy, Malaysia is not insulated from these developments. While the financial markets can be expected to experience volatility from time to time, the resilience of the underlying domestic economy continues to be the fundamental factor that will support the performance of the financial markets.

The strong corporate balance sheets and the favorable prospects for the economy remain important factors that will support this trend. Of greater significance, these external developments that have occurred in these two days have not had any material impact on the other domestic financial markets. Relatively stable conditions have prevailed in the foreign exchange market with two way flows moderating any significant movements in the market. The impact on the bond market has also been negligible, demonstrating the depth and maturity of the market. Thus, the preconditions prevailing in Malaysia would continue to support the growth momentum of the Malaysian economy.

Read the whole press release here.