14:47 | 20/08/2018 Global Economy
The Malaysian Central Bank on August 17 revised down the country’s growth forecast this year to 5 percent, after its gross domestic product (GDP) in the second quarter came in sharply below its expectation.
|Malaysia's first half GDP growth of 4.9 percent was lower than expectation - Photo: www.thestar.com.my|
At a press briefing to announce the latest GDP data, the central bank's governor, Nor Shamsiah Mohd Yunus, said the first half GDP growth of 4.9 percent was lower than expectation, so the bank has revised down its full year growth to reflect recent global tensions.
The bank earlier projected Malaysia to grow between 5.5 percent to 6 percent this year. However, after posting a GDP growth of 5.9 percent last year, the country's growth moderated to 5.4 percent in the first quarter.
It even posted a poorer growth of 4.5 percent in the second quarter due to commodity-specific shocks in the mining and agriculture sectors.
According to Nor Shamsiah, Malaysia’s growth this year will be supported by private sector spending due to tax holiday from June to August.
The Malaysian government abolished the goods and services tax in June, and will reintroduce the new form of sales and service tax in September.
She said one of the bright spots for Q2 growth was higher private investment growth of 6.1 percent amid continued high capacity utilisation. Private consumption also grew strongly by 8 percent, supported by continued income growth and better sentiments.
Nor Shamsiah said further escalation of trade tensions and financial market volatility are the two key risks for economy. If global trade dispute escalates and affects more products and countries, global growth will be dragged and the Malaysian economy will be affected.
However, she still believed the sustained domestic activities will provide some cushion to the country.