Malaysia's economy expanded at the fastest pace in more than two years in the second quarter on the back of domestic demand and robust exports, defying expectations for a slight slowdown. The strong performance is likely to add to speculation that Prime Minister Najib Razak will call early polls to take advantage of improving economic conditions and a fractured opposition. Southeast Asia's third-largest economy grew 5.8 percent in April-June from a year earlier, data showed on Friday, well above a Reuters poll forecast of 5.4 percent.
Growth accelerated from 5.6 percent in the first three months of the year, which had also been better than expected.
Following the data, Malaysia's central bank raised its 2017 growth forecast to above 4.8 percent. The last forecast in March predicted growth of 4.3 to 4.8 percent. "Based on the numbers from Q1 and Q2, we expect (full year) growth will go beyond our earlier forecast," Bank Negara Malaysia (BNM) Governor Muhammad Ibrahim told a news conference.
Construction, services and manufacturing all grew at a faster pace in the quarter, offsetting weakness in mining and agriculture. For a breakdown of the GDP data, see
Muhammad expected domestic consumption and exports to improve further in the second half, but warned there were always risks related to global factors. Exports grew 10 percent on-year in June, well below May's 32.5 percent. But analysts believe the slide may be due to seasonal factors, noting global demand still seems strong.
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