Bank Negara Malaysia, in its BNM Quarterly Bulletin, cited domestic demand registered a higher growth of 13.0% in respect of the second quarter this year. This rose from 4.4% registered Quarter 1.
This was mainly supported by a robust growth in private expenditure amid further normalisation of economic activity, as well as improving labour market conditions.
The report, released today, stated on the external front, demand for Malaysia’s exports, particularly for E&E products, remained strong.
Private consumption grew at a faster pace of 18.3% from 5.5% compared to the earlier quarter driven by higher spending on necessities and selected discretionary items such as restaurants and hotels, recreational services and household furnishings.
The strength in consumer expenditure was primarily driven by the recovery in the labour market.
Policy support, including the implementation of minimum wage hike, Bantuan Keluarga Malaysia and an Employees Provident Fund (EPF)-related measure also provided additional lift to consumer spending.
Public consumption expanded at a moderate pace of 2.6% (1Q 2022: 6.7%), weighed down by lower supplies and services spending, reflecting smaller COVID-19 related expenditure.
Improvement in investment activity
Gross fixed capital formation (GFCF) registered a higher growth of 5.8% compare to 0.2 % in the first quarter, as capital spending by both private and public sectors improved.
By type of asset, investments in structures and other assets expanded by 3.8% (1Q 2022: -7.9%) and 0.2% (1Q 2022: -0.9%) respectively.
Meanwhile, machinery and equipment (M&E) investments grew by 9.6% (1Q 2022: 12.0%).
Private investment expanded by 6.3% from 0.4% in Quarter 1, 2022 supported by increased capital spending in the services and manufacturing sectors.
Structures investments improved, as businesses across the key sectors resumed investment projects, particularly in the non-residential segment.
Furthermore, capital spending in manufacturing and ICT-related machinery and equipment continued to lift investment growth.
This is in line with firms’ efforts to expand capacity amid continued demand and further adoption of automation and digitalisation.
Public investment registered a growth of 3.2% (1Q 2022: -0.9%), driven mainly by improvement in capital expenditure by public corporations in the oil and gas, and telecommunication sectors.
The BNM Quarterly Bulletin presents a quarterly review of Malaysia’s economic, monetary and financial developments. It includes the Bank’s latest assessments on the direction of the economy going forward. The Bulletin also provides insights on current economic and financial issues, including highlights of policy initiatives undertaken by Bank Negara Malaysia in pursuit of its mandates.
