KUALA LUMPUR (AFP) – Growth in Malaysia’s economy slowed to a “moderate” 5.6 per cent in the third quarter as exports decelerated, the central bank said Friday, but it added that domestic demand was expected to support steady expansion.
Southeast Asia’s third-largest economy depends heavily on exports but in recent years has increasingly leaned on domestic demand as demand in key overseas markets stutters.
In the three months through September, private-sector activity “remained the key driver of growth”, while exports expanded at a “slower pace” of 1.5 per cent, Bank Negara said.
The latest figure compares with 6.5 per cent in the previous three months and 6.2 per cent in January-March.
Third-quarter growth in 2013 was 5.0 per cent.
“While risks to growth have increased, the Malaysian economy is expected to remain on a steady growth path,” Bank Negara said.
“Going forward, domestic demand will remain the key driver of growth.”
Inflation averaged 3.0 per cent in the third quarter, down from 3.3 per cent in the second.
Malaysia is planning to introduce a six-per cent goods and services tax next year, which economists say in necessary to help lower one of Asia’s highest debt-to-GDP ratios, but the plan remains controversial.