Malaysia economy grows 5.2 percent in Q4

KUALA LUMPUR—Malaysia’s economy grew 5.2 percent in the fourth quarter of 2011, up slightly over the year-earlier period as public spending offset weakness in export markets, the government said Wednesday.

But the persistent world economic uncertainty caused full-year 2011 growth to slip to 5.1 percent, down from a 7.2 percent expansion in 2010, the central bank added.

Bank Negara said the fourth-quarter numbers for the export-dependent country were constrained by trouble in the crisis-hit Eurozone and other key markets, which contributed to an easing in export growth to 9.8 percent.

Exports had grown 11.3 percent in the third quarter.

Despite the overseas threats, Malaysia’s economy had been growing at a steadily quickening pace throughout the year, hitting 5.8 percent growth in the third quarter.

The central bank said a central government campaign to spur domestic demand through greater public spending had helped buoy the economy.

The full-year growth of 5.1 percent was “commendable” in light of the world situation, said Yeah Kim Leng, chief economist with financial research firm RAM Holdings.

“Going forward, we expect the Asian economies, given their shift towards boosting domestic and regional demand, to weather the European headwinds,” he said.

The central bank warned “the more challenging external environment could present greater downside risks to Malaysia’s growth prospects” in 2012, adding that domestic demand would have to continue taking up the slack.

The government said last week that 2011 exports grew a healthy 8.7 percent, largely due to demand from China, which for the first time became Malaysia’s top export market.

Yeah said he expected Malaysian economic growth to slow to between 4 and 5 percent in 2012 due to protracted European troubles.

He said the central bank was likely to lower interest rates to boost local demand if the Eurozone situation persists or takes a turn for the worst.

The central bank maintained its benchmark borrowing rate last month. It has kept the rate consistent since May.

Growth in Malaysia’s consumer price index eased to 3.2 percent in the fourth quarter, Bank Negara said, compared to 3.4 percent in the third quarter.