Malaysia’s economy grew at the fastest pace in five quarters amid an export recovery, increasing scope for the central bank to raise interest rates and contain threats to financial stability. Gross domestic product rose 6.2 percent in the three months through March 31 from a year earlier, after climbing 5.1 percent
Malaysia's economy grew at the fastest pace in five quarters amid an export recovery, increasing scope for the central bank to raise interest rates and contain threats to financial stability.
Gross domestic product rose 6.2 percent in the three months through March 31 from a year earlier, after climbing 5.1 percent in the final quarter of 2013, the central bank said in a statement in Kuala Lumpur today. The median in a Bloomberg News survey of 22 economists was for a 5.7 percent increase.
A revival in global demand, led by more confident American households and businesses, is spurring orders for Malaysian goods while wage growth and capital spending in the Southeast Asian economy fuel consumption. Bank Negara Malaysia signaled this month it may need to adjust the degree of monetary policy accommodation to avoid a build-up in financial and economic imbalances, spurring bets it will raise borrowing costs.
“Strengthening exports, on the back of improving demand from advanced economies, should support overall growth and create scope for the BNM to tackle financial risks,” said Krystal Tan, a Singapore-based economist at Capital Economics Ltd. The “strong out turn has increased the odds of the BNM hiking its policy rate in July,” she said.
The ringgit has strengthened about 1 percent this month against the US dollar. The FTSE Bursa Malaysia KLCI Index of shares rose 0.2 percent today. Malaysian interest-rate swaps are pricing in a 50 basis-point increase in borrowing costs in the next year, data compiled by Bloomberg show.