It attributed the improvement to higher domestic demand with the easing of Covid-19 containment measures, a recovery in the job market reflected by the unemployment rate declining to 4.1% as well as continued policy support.
In addition, this growth was also supported by strong external demand amid the continued up-cycle in global technology. On the supply side, services and manufacturing sectors continued to expand economic growth by 6.5% and 6.6% respectively.
On a quarterly basis, the economy grew by 3.9%.
The central bank also expects headline inflation to moderate to 2.2% in Q12022, reflecting the smaller contribution from the dissipating base effect from lower domestic retail fuel prices last year as well as the absence of the base effect from electricity tariff rebates in 2020.
Core inflation for the quarter increased to 1.7%.
Bank Negara governor Nor Shamsiah Mohd Yunus said that moving forward, the improvement in the labour market will be key in ensuring continued growth.
Latest figures from the indicated the nominal wages in the manufacturing sector, services sector and private sectors has improve by 5.0%, .4.1% and 47% respectively.
Shamsiah said the first quarter growth performance and the latest indicators show that growth is already on a firmer footing.
“We still expect the Malaysian economy to expand within the 5.3% to 6.3% range driven by higher domestic demand and support from external demand, given the normalisation in economic activities especially with the reopening of international borders and more importantly the improving labour market conditions,” she told the media during BNM’s first quarterly performance briefing, today.
She said the upside potential for the growth outlook, which could come from a better than expected employment and income position, could support household spending and stronger recovery in tourism related sectors.
“However, uncertainties surrounding the outlook remain, particularly from external factors including prolonged supply chain disruptions amid military conflict in Ukraine and lockdowns in China,” she added.
We are live on Telegram, subscribe here for breaking news and the latest announcements.