Strong expansion in private consumption and fixed investment lifted
GDP growth to 5.6% in 2012, close to the average growth rate in the
5 years before the global financial crisis. Growth accelerated...
to 6.4% in
the fourth quarter.
Private consumption increased by 7.7% and made a major contribution
to GDP growth (Figure 3.26.1). It was driven by a robust labor market,
growth in credit, and several government decisions during the year.
Employment grew by 3.6%, mostly in domestic-oriented sectors such as
services, and the unemployment rate declined to 3.0%. Average wages in
the private sector rose by a robust 5.0%. The government’s contribution to
private consumption came from a 13.0% increase in public sector wages
in March 2012 (directly benefitting 10% of the workforce), higher public
sector pensions, and a range of cash transfers to low- and middle-income
Fixed investment surged by 19.9%, its best performance in 12 years
(Figure 3.26.2). Much of the investment was related to the government’s
Economic Transformation Programme, which aims to lift Malaysia into
the ranks of high-income nations by 2020 by upgrading industry and
infrastructure. Private sector investment was particularly strong, climbing
by 22.0%, while public sector investment rose by 17.1%. Major investment
projects under way in 2012 included an $11.5 billion mass rapid transit
rail system in Kuala Lumpur, expansion of oil and gas processing and
other energy projects, and a high-speed broadband network. This surge in
investment was an important source of GDP growth last year.
The ratio of fixed capital investment to GDP was, at 25.6% in 2012, the
highest in 14 years, though still well below the 40% pace of the mid-1990s.
Government consumption spending decelerated from 2011 but still
made a small contribution to economic growth last year. However, the
external sector acted as a drag on GDP growth, as weak global demand
flattened exports of goods and services in real terms while buoyant
domestic demand fueled growth in imports.
Sources: Department of Statistics Malaysia. http://statistics.gov.my; CEIC Data Company (both accessed 2 March 2013).
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