Malaysian economy expands at fastest pace in more than 3 years

(Bloomberg) – Malaysia’s economy grew at the fastest pace in more than three years in the third quarter, supported by resilient domestic demand and a manufacturing sector that’s benefiting from booming global trade.

Gross domestic product rose 6.2% from a year earlier, after climbing 5.8% in the second quarter, Bank Negara Malaysia said Friday.

The median estimate of 19 economists surveyed by Bloomberg was 5.7%. GDP rose a seasonally adjusted 1.8% from the previous three months.

Malaysia has emerged as one of the bright spots in Southeast Asia this year, with economists upgrading growth projections amid an export recovery. Prime Minister Najib Razak raised his forecast for this year to as much as 5.7% in a budget speech last month, while also outlining tax cuts and bonus payments to government workers that will help spur consumer spending into next year.

The government is projecting growth of 5% to 5.5% in 2018.

The central bank may be among the first in Asia to begin tightening monetary policy as growth and inflation accelerate.

Bank Negara Malaysia said last week it may consider reviewing its “current degree of monetary accommodation,” given the strength of global and domestic economic conditions. Consumer prices rose at the fastest pace in five months of 4.3% in September.

“Favorable economic prospects accord greater flexibility to review the degree of monetary accommodation,” the central bank said in the GDP statement on Friday.

Private sector consumption surged 7.2% in the third quarter from a year earlier, while investment climbed 7.9%.

Growth in public sector expenditure rebounded to 4.1% from 0.2% in the second quarter. Exports increased 11.8%, while imports surged 13.4%. Service industries grew 6.6%, up from 6.3% in the second quarter. Manufacturing growth accelerated to 7% from 6%.