The fourth-quarter growth, which beat economists’ expectations of a 5 per cent expansion, was underpinned by strong domestic consumption.
The expansion in the last three months of the year took the economy’s full-year growth to 5.1 per cent. That is a marked slowdown from 7.2 per cent in 2010 as the Southeast Asian country felt the impact of weaker activity in advanced economies and uncertainties over the euro zone debt crisis.
“For the Malaysian economy, the favourable growth in the fourth quarter was underpinned by sustained domestic demand amid (a) weaker external environment,” the central bank said in a statement.
“Going forward, the more challenging external environment could present greater downside risks to Malaysia’s growth prospects.”
Private consumption rose 7.1 per cent from a year ago, while public spending jumped 23.6 per cent.
GDP growth had accelerated in the third quarter to 5.8 per cent but the central bank cautioned of a weaker outlook as global uncertainties erode demand for exports.
The central bank has kept monetary policy on hold since May 2010, when it hiked the benchmark interest rate for the fourth time after starting a tightening cycle in 2010.
Inflation in December eased to an annual pace of 3.0 per cent from 3.3 per cent in November and is expected to fall further, which could give the central bank leeway to cut interest rates at its next meeting in March. – Reuters
