KUALA LUMPUR, May 19 (Xinhua) -- The Malaysian economy in the first quarter of 2017 expanded 5.6 percent year-on-year, its best in two years since the first quarter of 2015, beating expectations and forecasts.
At a press briefing on Friday morning, Bank Negara Malaysia (BNM) governor Muhammad bin Ibrahim told reporters that the higher-than-expected result was supported by strong consumption and investment, public sector spending and higher exports.
Malaysia's economic growth in the last quarter of 2016 stood at 4.5 percent. BNM said in March it expected economic growth for the whole year to be between 4.3 and 4.8 percent, but the Q1 results gave it reasons to be more optimistic.
"Amid further improvement in the global economy, the Malaysia economy remains on track to register improved performance in 2017," said Muhammad.
Given the strong start, Kuala Lumpur-based UOB Bank economist Julia Goh said she is upgrading her full-year GDP forecast to the upper end of BNM range.
"Despite concerns of sluggish consumer sentiment and rising price pressures, private consumption is held up by positive wage growth and expanding employment. Business sentiment turned more upbeat in first quarter amid strengthened export orders and resilient manufacturing," she told Xinhua in an email.
RHB Research Institute chief economist Lim Chee Sing is also upgrading the research house's GDP growth forecasts to 4.8 percent this year and 5 percent next year, from 4.5 percent and 4.7 percent respectively, due to his anticipation of the normalization in export growth in the second half. Malaysia's exports in February and March jumped 26.5 percent and 24.1 percent year-on-year respectively.
"Export was strong in the first quarter, this will have spill over effect to domestic demand over time," Lim told Xinhua over the phone.
But the governor also listed several challenges faced by the Southeast Asian nation, including uncertainties in policies, rising geopolitical risks around the globe, protectionism and trade barriers.
"The reason why I am concerned about these is because Malaysia is a very open economy, around 40 percent of our economy is open globally. So what happens in social, geopolitical sphere will affect us," he said.