KUALA LUMPUR: Malaysia's economy grew a better-than-expected 5.2 percent in the third quarter as domestic demand continued to compensate for a slowdown in exports, the government said yesterday.
The central bank said Southeast Asia's third-largest economy expanded due to private consumption and private and public investment in such sectors as transportation, oil and gas, and public utilities.
This managed to offset a further decline in demand abroad for the export-reliant country's goods and services as its key partners, such as the US and Europe, are struggling amid the global economic crisis.
"Going forward, the more challenging international environment would present risks to Malaysia's growth prospects," Bank Negara said in a statement.
"Nevertheless, domestic demand is expected to continue to be the anchor of growth, supported by the expansion in private consumption and investment. Public spending and investment activity are also expected to lend support to growth," it added.
Malaysia's economy grew a faster-than-expected 5.4 percent in the second quarter, and a revised 4.9 percent in the first quarter.
Bank Negara has previously forecast full-year growth between four and five percent, slower than the 5.1 percent seen last year.
Alan Tan, an economist with Affin Investment Bank, said he was revising his expectations for full-year growth to five percent as the third quarter figure was better than the 4.9 percent that had been expected.
"The 5.2 percent is driven mainly by healthy domestic demand driven by private investment and consumption. We expect this trend to continue into the fourth quarter," he said.
Inflation moderated to 1.4 percent in the third quarter, down from 1.7 percent in the second quarter, the central bank said.
Prime Minister Najib Razak, who must face a strengthening opposition in elections by mid-2013, has set a goal of Malaysia becoming a "high-income developed nation" by 2020. He has previously said the economy needs to expand six percent annually to reach that target.