KUALA LUMPUR, Malaysia (AP) - Malaysia's economy expanded a surprisingly strong 5.3 percent in the first quarter from a year ago as strength in services cushioned weak overseas demand for electronics goods, the central bank said Wednesday.
''It's a strong start to the year, despite a slowdown in the U.S.,'' said Sia Ket Ee, an economist at OSK Securities. ''Given that domestic factors are very favorable, the economy should expand by 6.2 percent this year.''
The quarterly growth was stronger than the average 4.7 percent expansion forecast by 11 economists polled by Dow Jones Newswires, but slower than the 5.7 percent expansion in the fourth quarter.
Bank Negara Malaysia Governor Zeti Akhtar Aziz said the strong start to the year put Malaysia on track to meet its 6 percent growth target, with public spending and external demand expected to accelerate later this year.
Growth in the first quarter was fueled by the services sector, which expanded 9.6 percent from 8 percent in the previous quarter, she said. The construction sector grew 4 percent from 0.6 percent growth in the fourth quarter, boosted by new infrastructure spending under the government's five-year development plan.
Private sector consumption expanded 8.6 percent, better than 7 percent growth in the fourth quarter while public sector consumption rose 7.3 percent from 4.1 percent in the fourth quarter, she said.
This helped offset a slowdown in the manufacturing sector, which grew only 1.7 percent in the first quarter compared to 4 percent in the December quarter, due to a sharp decline in exports of electrical and electronics goods, the country's key exports.
OSK's Sia said the services sector's strong performance was partly due to a change in the base year for calculation from 1987 to 2000, which has allowed statisticians to capture emerging industries such as business process outsourcing and oil and gas engineering services.