The Malaysian economy grew by 5.4% in the first quarter of 2018 Overall growth was underpinned by continued expansion in private sector activity and strong support from net exports. From the supply side, all economic sectors expanded. On a quarter-on-quarter seasonally-adjusted basis, the economy grew by 1.4% (4Q 2017: 1.0%).
Headline inflation declined to 1.8% in 1Q 2018 (4Q 2017: 3.5%), reflecting the smaller
contribution of domestic fuel prices due to the smaller increase in global oil
prices compared to the previous quarter and a stronger ringgit exchange rate
in 1Q 2018.
Financial stability sustained with financial intermediation and domestic
market conditions remaining orderly. Domestic financial market conditions remained orderly despite heightened volatility arising from external developments.
Domestic financial institutions demonstrated resilience with healthy asset quality, sound profitability and ample liquidity. Credit intermediation activities remained supportive of real
economic activities with businesses and households maintaining sound debt
Going forward, the Malaysian economy is expected to remain on a
favourable growth path in 2018 Growth is expected to remain favourable in 2018, with domestic demand continuing to be the key driver of growth.
Underlying inflation, as measured by core inflation, is also expected to remain small, due to smaller cost pass-through to retail prices compared to 2017.
The Bank also wishes to feature three issues. The first – “Trade Disputes:
Implications for Trade and Investments” – assesses the potential impact and
policy implications from recent potential trade measures announced by the
US and PR China (arising on both the global and Malaysian economy).
A key policy consideration includes pursuing reforms to ensure domestic demand
remains resilient to mitigate any external shocks to the economy. The
second – “Global Slack as a Determinant of Inflation” – looks into the
influence of the factors associated with globalisation on inflation dynamics in
Asia-Pacific economies. It highlights the growing challenges faced by
monetary authorities in forecasting and managing inflation when it is
increasingly influenced by global factors.
The third – “Improving Quality and Transparency of Services to Financial Consumers” – highlights to the public, initiatives taken by the financial industry in collaboration with the Bank to improve the quality and transparency of customer services.
These initiatives include setting sector-wide customer service standards for the banking
sector and conducting a Customer Satisfaction Survey to assess consumers’
actual banking experiences.