KUALA LUMPUR (May 13): Malaysia’s economy grew at a slower pace of 4.2% in its first quarter in 2016 (1QFY16) compared with 5.7% a year ago, with a value of RM291 billion.

According to the Department of Statistics Malaysia, all sectors in production posted a positive growth except for agriculture, while the continuous expansion in the services, manufacturing and construction led the growth, remaining its main catalyst.

On the expenditure side, the economy was spearheaded by private final consumption expenditure and government final consumption expenditure, it said in a statement.

The expansion in both consumption has offset the sluggish performance in external demand.

On a quarter-on-quarter seasonally adjusted, the GDP grew 1% compared with 1.2% growth in the fourth quarter of 2015.

The department said that services sector increased to 5.1% (4Q15: 5%) supported by wholesale and retail (5.2%), and information and communication (8.5%).

Business services improved to 7.3% on professional activities, it added.

The manufacturing sector grew at 4.5% (4Q15: 5%), underpinned by electrical, electronic and optical products (5.7%), mainly in semiconductors, computers and peripheral equipment.

“Its performance was further supported by petroleum, chemical, rubber and plastic products that grew 2.7% (4QFY15: 1.4%), following a turnaround in refined petroleum products and expansion in chemical and plastic products,” it said.

The construction sector rose at a faster rate of 7.9% (4Q15: 7.4%), with civil engineering sustaining a double-digit momentum by registering a growth of 17.5% (4Q15: 20.4%) and continued to support the construction sector.

Specialised construction activities strengthened to 8.9%, contributed primarily by earthworks and piling projects.

Exports decreased 0.5% in 1QFY16, reflected by the subdued momentum in exports of goods; while imports moderated to 1.3% (4Q15: 4%) due to a contraction in imports of goods.

Meanwhile, Bank Negara Malaysia in a statement today said the slight moderation in growth, mainly reflected external shocks to the economy and cautious spending by the private sector.

It said the financial system remained resilient against potential risks related to spillovers from the weaker global growth and continued volatility in the international financial and commodity markets.

“Domestic risks more broadly have continued to moderate. However, more challenging business conditions and rising costs will likely weigh on the revenue and loan performance of financial institutions in the period ahead, requiring higher vigilance.

“Overall, downside risks to the global economy remain elevated. Cyclical and structural economic weaknesses continue to weigh on growth in the major economies, in addition to uncertainty in the direction of energy prices and rising geopolitical risks,” it said.

Looking ahead, it said although the global economy is projected to improve, the pace of expansion is expected to be moderate and uneven. In most of Asia, growth will be underpinned by domestic demand, with continued policy support.

Going forward, the Malaysian economy is expected to remain on a sustained growth path of 4% to 4.5%, despite the challenging economic environment both globally and domestically.

“Domestic demand will continue to be the principal driver of growth, sustained primarily by private sector spending. However, domestic consumption is expected to grow at a moderate pace, as households continue to adjust to the higher cost of living.

“Overall investment is also expected to grow at a slower pace, but will remain supported by the implementation of infrastructure development projects and capital spending in the manufacturing and services sectors.

“Uncertainties in the external environment and the on-going adjustments in the domestic economy, pose downside risks to growth,” it added.