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Malaysia economic growth accelerates unexpectedly


Zeti Akhtar Aziz. — Bloomberg file picture

Kuala Lumpur: Malaysia's growth unexpectedly accelerated to the fastest pace in six quarters on surging exports, adding scope for the central bank to raise interest rates further.

The ringgit rose to a nine-month high.

Gross domestic product (GDP) rose 6.4 per cent in the three months through June from a year earlier, after climbing 6.2 per cent in the first quarter, the central bank said in a statement in Kuala Lumpur yesterday. The median in a Bloomberg News survey of 25 economists was for a 5.8 per cent increase.

Malaysia was the first in Southeast Asia to raise its benchmark rate in 2014 as investment, private consumption and overseas orders for the nation's goods sustained growth. Southeast Asia's third-largest economy is outperforming its regional counterparts amid slowing expansions in Indonesia and Singapore last quarter.

"It's one of the standouts so far, one of the few economies actually seeing growth picking up strongly," said Krystal Tan, a Singapore-based analyst at Capital Economics. ''This means that the central bank would have room to further normalise monetary policy.''

The ringgit rose 0.6 per cent to 3.1615 against the US dollar as of 1:46pm local time. It has strengthened about 3.6 per cent this year, the second-best performer among 11 major Asian currencies tracked by Bloomberg. The FTSE Bursa Malaysia KLCI Index of shares erased losses and climbed 0.1 per cent.

Raising forecasts
GDP expansion this year will probably exceed the central bank's forecast range of 4.5 per cent to 5.5 per cent, Governor Zeti Akhtar Aziz said Friday. The government will announce a new growth forecast during its budget, she said. Barclays and Australia & New Zealand Banking Group's analysts raised their 2014 growth estimates for Malaysia after Friday's data.

Indonesia's growth eased to the slowest since 2009 last quarter, while Singapore's expansion was the least in more than a year. Thailand may say its economy swung to an expansion of 0.1 per cent in the second quarter from a year ago, according to the median of 15 estimates before the data is released August 18.

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