The Malaysian economy will maintain its rapid growth for the 2017 calendar year, with full year gross domestic product (GDP) growth exceeding 5.0%, according to IHS Markit. The World Bank raised the nation's growth forecast in June by the most in East Asia, projecting 4.9 per cent expansion this year.
Household debt levels were high, at 86.7 per cent of GDP in the first quarter of 2017 but reasonably strong employment and income growth countered some of the risk for the banking sector from high household debt, it said.
"The manufacturing sector grew at a rapid pace of 6.0% y-o-y in Q2, propelled by buoyant growth in global demand for the Malaysian electronics production".
"Private consumption spending received a boost in 2017 from a 15 per cent increase in cash transfers under BR1M (a cash transfer programme of the government aimed at lower income households) and exports have strengthened", it said. Agriculture output rose 5.9% in the quarter and the construction sector grew 8.3% on year in the second quarter.
The central bank will monitor the sustainability of growth as well as signs of demand-pull inflation pressure, the governor said.
Meanwhile, Malaysia balance of payments recorded a surplus on current account of 9.6 billion ringgit in the second quarter compared with 5.3 billion ringgit in the previous quarter, data released separately showed. Headline inflation will continue moderating in the second half of 2017, he added.