This article first appeared in The Edge Financial Daily on February 15, 2018

KUALA LUMPUR: Malaysia’s current account surplus widened to RM12.9 billion in the fourth quarter of 2017 (4Q17) from RM12.5 billion in 3Q17, accounting for 3.7% of gross national income (GNI), according to Bank Negara Malaysia.

The higher surplus level beat UOB Malaysia’s forecast of RM12 billion and consensus forecast of RM11 billion.

The wider surplus was attributed to larger goods surplus and lower deficit in the secondary income account, offsetting the higher deficits in the services and primary income accounts.

For the full-year period, the current account surplus widened to RM40.3 billion or 3.1% of GNI, which was the highest in two years.

Zooming in on the figures, the goods surplus increased to RM34.1 billion in 4Q17 from RM31.7 billion in 3Q17, while the services account registered a larger deficit of RM6.9 billion, mainly due to the lower surplus of RM7.9 billion in the travel account as travel receipts fell.

The construction services deficit was also higher, driven by higher construction services imports in projects related to the oil and gas, utilities and transportation sectors.

The primary income account saw a higher deficit of RM9.5 billion compared with RM8.6 billion in the preceding quarter, amid higher profits accrued to foreign investors in Malaysia, especially in the mining, and wholesale and retail trade services sub-sectors.

The deficit was partly offset by higher profits by Malaysian firms investing abroad, particularly in the real estate services sub-sector.

Meanwhile, the secondary income account registered a smaller deficit of RM4.8 billion, versus RM5.7 billion in 3Q17. It said outward remittances totalled RM8.6 billion driven by foreign worker remittances, while inward remittances were unchanged at RM3.8 billion.