Its services and manufacturing sectors have boosted the economy.
Malaysia's real GDP growth hits 5.8% in Q2.
According to UOB, Bank Negara Malaysia (BNM) expects the GDP to grow more than 4.8% for the year on the back of domestic demand. It also expects inflation to ease in the next half year and the consumer price index to grow by 3% to 4%.
The country's current account surplus grew to US$2.2b (RM9.6b), reaching US$3.5b (RM14.9b) or 2.3% of the GDP in H1.
UOB analyst Julia Goh said, "Despite the strong headline GDP, we expect OPR to stay unchanged. Downside risks to watch include rising US-China trade frictions, North Korea provocations and US response. Next BNM monetary policy meetings are on 7 Sep and 9 Nov."
Here's more from UOB:
Overall growth was lifted by both domestic and external trade. External demand was supported by continued expansion in global growth.
Domestic demand was driven by steady wage and employment growth (unemployment rate steadies at 3.4% between Mar-Jun), business investments, and ongoing implementation of infrastructure projects. Both private sector (7.2%) and public sector spending (0.2%) remained supportive of growth. Net exports contributed 0.1% and inventories added 0.4% to overall growth.
There were broad-based increases across private consumption (2Q: 7.1%, 1Q: 6.6%), private investment (2Q: 7.4%, 1Q: 12.9%), and public consumption (2Q: 3.3%, 1Q: 7.5%). Private investments grew in the services and manufacturing sectors in line with recovery in demand.
Manufacturers undertook capacity expansions, machinery and equipment (M&E) acquisitions and replacements to cater for new orders. In the services sector, investment was supported mainly by expansions in the utilities, healthcare and food & beverage and accommodation sub-sectors.
The pick-up comes in line with improved consumer confidence and business sentiment indicators. Public investments fell 5.0% due to lower spending on fixed assets by public corporations. Net exports grew by 1.4% (1Q: -14.5%) thanks to resilient exports (9.6%) while imports moderated (10.7%).
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