Thursday, November 20, 2003

Overseas demand lifts Malaysia economy

By Stephanie Phang
Bloomberg News

KUALA LUMPUR Malaysian economic growth accelerated in the third quarter, the government said Wednesday, as computer chipmakers and oil-palm producers raised production to meet increased demand from overseas.
Gross domestic product expanded 5.1 percent from a year earlier in the three months to Sept. 30, the central bank said. The economy grew a revised 4.5 percent in the second quarter and the bank said it expected full-year growth to be higher than the government's official forecast of 4.5 percent.
Malaysia's growth is "in line with the trend in the region where growth rates are coming in above expectations," said Paul Schymyck, regional economist at IDEAglobal. "Growth for the full year would be closer to 5 percent."
Malaysia's $95 billion economy, Southeast Asia's third largest, joins a regional revival after the Iraq war and the SARS outbreak hurt growth in the second quarter. Economic expansion in the United States and China is bolstering demand for Asian computer chips, drugs and other goods.
"The two things that affected the economy in the first half - war and SARS - are no longer there," said Suhaimi Ilias, an economist at Affin UOB Securities.
At home, an interest rate cut and a $1.9 billion program of loans and government spending announced in May is giving a boost to domestic demand, Suhaimi said.
The Malaysian government is reviewing its trade data because a change from manual processing to an electronic system gave rise to some exclusions, the central bank said. The exclusion resulted in the country reporting a 5 percent drop in exports in the third quarter.
"It would be a better performance than what the data has shown," central bank governor Zeti Akhtar Aziz told reporters in Kuala Lumpur.
Manufacturing, which is about a third of the economy, grew 8.5 percent from a year earlier, faster than the 6.5 percent growth in the second quarter. Farm production grew 6.2 percent, slower than the 10.4 expansion in the second quarter. Mining shrank 0.7 percent, compared with an 11.1 percent growth in the previous three months.
Construction activity grew 2.4 percent from a year earlier, faster than the 1.4 percent growth in the first quarter.
Malaysia's services industry, which accounts for 57 percent of gross domestic product, grew 4.2 percent in the third quarter, from 2.9 percent growth in the second quarter.

Bloomberg News