Malaysia’s Economic Growth Accelerates on Recovery in Exports

Malaysia’s economy expanded at the fastest pace in four quarters as a recovery in advanced nations including the U.S. boosted demand for the country’s goods.

Gross domestic product climbed 5.1 percent in the three months through Dec. 31 from a year earlier, after gaining 5 percent in the third quarter, the central bank said in a statement in Kuala Lumpur today. The median in a Bloomberg News survey of 21 economists was for a 4.8 percent increase. The economy grew 4.7 percent last year after a 5.6 percent expansion in 2012.

Rebounding exports are countering a spending squeeze in the Southeast Asian nation as Prime Minister Najib Razak trims public expenditure to avoid a credit-rating downgrade and shift consumers toward market-based prices for commodities and energy. Inflation risks are rising and the central bank may be moving closer to an interest-rate increase after keeping borrowing costs unchanged since mid-2011, according to Barclays Plc.

“We expect growth momentum to remain resilient, and we think Bank Negara will lean towards a tighter monetary stance over the coming months,” Rahul Bajoria, a Singapore-based economist at Barclays, said before the release.

The ringgit gained for a second day, trimming its three-month loss against the U.S. dollar to about 3.4 percent. The risk of capital flight has weakened emerging-market currencies as the U.S. Federal Reserve pares stimulus. The FTSE Bursa Malaysia KLCI Index of shares rose 0.1 percent today.

Surplus Widens

Malaysia’s current-account surplus widened to 16.2 billion ringgit ($4.9 billion) in the fourth quarter from 9.8 billion ringgit in the preceding three months. That compared with the median estimate for a surplus of 17.5 billion ringgit in a Bloomberg survey of seven analysts.

Fitch Ratings lowered Malaysia’s credit outlook to negative in July and reiterated last month the country could move closer to a downgrade if a persistent current-account deficit develops along with a fiscal shortfall.

Inflation accelerated to 3.2 percent in December, the fastest pace in two years. Overseas shipments picked up in the second half of 2013, after a “lackluster” first six months of the year, the trade ministry said last week. Southeast Asia’s third-largest economy is projected by the government to expand 5 percent to 5.5 percent in 2014.

Services rose 6.4 percent in the three months through December from a year earlier after climbing 5.9 percent in the third quarter, today’s report showed. Construction gained 9.7 percent last quarter, while manufacturing grew 5.1 percent.

Exports of goods and services climbed 2.9 percent in the final quarter of 2013 from a year earlier, after rising 1.7 percent in the third quarter, according to the report. Private consumption growth slowed to 7.3 percent last quarter, while the expansion in public spending eased to 5.1 percent.

To contact the reporter on this story: Chong Pooi Koon in Kuala Lumpur at pchong17@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net

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