Posted on 08 May 2015
The committee said the latest indicators suggest that domestic demand has continued to support growth in the first quarter.
"Looking ahead, the prospects are for the Malaysian economy to remain on a steady growth path, with domestic demand remaining as the key driver of growth," it said in a statement yesterday.
BNM said private consumption is expected to moderate as households adjust to the introduction of the Goods and Services Tax (GST), however consumption expenditure will be supported by the steady rise in incomes and employment.
Investment activity is expected to be led by capital spending in the export-oriented industries, the services sector and for infrastructure projects, it said.
"These investments will cushion the impact of the lower oil and gas-related investment activity," it noted.
On the external front, while export growth will be affected by lower commodity prices, manufactured exports will continue to benefit from the improvement in economic activity in several advanced economies and the sustained growth in Asia.
BNM said headline inflation averaged at 0.7% in the first quarter of 2015 due to lower domestic fuel prices.
"For the rest of the year, headline inflation is expected to trend higher given the impact of the implementation of the GST.
"This is expected to be partially offset by the overall lower global commodity and energy prices. Underlying inflation is expected to remain contained amid the stable domestic demand conditions," it said.
The MPC said it will continue to carefully assess external and domestic developments and their implications on the risks to inflation and the Malaysian economy.
"While the risks of destabilising financial imbalances are contained, the MPC will continue to monitor these risks to ensure the sustainability of the overall growth prospects," it added.
