KUALA LUMPUR (Nov 16): The Malaysian economy is expected to remain on a steady growth path for the remainder of the year, after recording a gross domestic product (GDP) growth of 4.4% in the third quarter of 2018. 

According to Bank Negara Malaysia (BNM), private sector activity continued to be the primary driver of growth as private consumption expanded strongly, following the zerorisation of Goods and Services Tax (GST) during the quarter. 

“On the supply side, the services and manufacturing sectors supported growth, while the mining sector continued to be affected by production shocks,” BNM governor Datuk Nor Shamsiah Mohd Yunus said in a release of the Malaysian Economic Performance in the Third Quarter of 2018 report. 

The agriculture sector, on the other hand, remained weak due to the protracted recovery from production constraints in the previous quarter.

Meanwhile, headline inflation declined to 0.5% during the third quarter of 2018, compared with 1.3% in the previous quarter, mainly reflecting the impact from the GST zerorisation. 

“The implementation of the sales and services tax (SST) beginning September 1, 2018 had a muted impact on inflation during the quarter,” Shamsiah added. 

Going forward, BNM expects private sector activity to remain the key driver of growth, amid the repriotisation of public sector expenditure. 

Furthermore, headline inflation is expected to increase primarily due to higher projected global oil prices and the prospective floating of fuel prices.

“While the impact of the consumption tax policy will contribute to higher headline inflation in 2019, it will lapse towards the end of 2019,” the report added.