Bank Negara Quaterly Bulletin 3rd Quarter 2012

7/28/2019 Bank Negara Quaterly Bulletin 3rd Quarter 2012

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DEVELOPMENTS IN THE MALAYSIAN ECONOMY

Malaysian economy expanded by 5.2%in the third quarter

The Malaysian economy recorded a growth o5.2% in the third quarter o 2012(2Q 12: 5.6%). Growth was driven by acontinued robust expansion in domesticdemand amid weaker external demand.Net exports contracted urther, with exportsdeclining due to the deterioration in exports omanuactured goods and commodities. The lasttime exports showed a decline was in 3Q 2009.On the supply side, activity in most economicsectors moderated in the third quarter.

Domestic demand remained supportive

Domestic demand expanded by 11.4% in thethird quarter o 2012 (2Q 12: 14.0%) supportedby the avourable perormance o privateconsumption and investment activity by both theprivate and public sectors.

(2Q 12: 24.6%), supported by capital spending inthe services sector, such as the transportation,real estate and utilities sub-sectors and theon-going implementation o projects in the oiland gas sector. Public investment expandedby 22.4% (2Q 12: 28.9%), driven by capitalspending by the public enterprises (mostly,the non-fnancial public enterprises in thetransportation, oil and gas, and utilities sectors).Federal Government development expenditurewas channeled mainly into the transportation,education and public utilities sectors. Thecontinued expansion in investment activity wasalso reected in key indicators such as saleso commercial vehicles and imports o capitalgoods.

Private consumption grew at a continued strongpace o 8.5% in the third quarter(2Q 12: 8.8%). Household spending wassupported by avourable labour marketconditions and sustained income growth.Consumption also benefted rom the bonuspaid to civil servants and the second (o three)payout o RM5,000 to 112,635 FELDA settlers.

The continued expansion in consumer spendingamidst improved sentiments was reected inthe growth o imports o consumption goods,services tax collections and credit card spending.

Public consumption, moderated to 2.3%(2Q 12: 10.9%), attributable to lower spending insupplies and services.

GDP by Expenditure Components

(at constant 2005 prices)

2011 2012

3Q 4Q 1Q 2Q 3Q

Annual change (%)

Aggregate Domestic Demand

(excluding stocks)

Consumption

Private sector

Public sector

Gross Fixed Capital Formation

Private sector

Public sector

Net Exports

Exports of Goods and Services

Imports of Goods and Services

8.7

10.0

7.6

21.1

5.4

2.9

9.4

10.5

4.8

3.9

10.4

11.1

7.3

22.9

8.4

18.8

1.9

-10.5

5.5

7.8

10.0

7.7

7.4

9.1

16.1

19.8

10.3

-20.9

2.8

6.8

14.0

9.2

8.8

10.9

26.1

24.6

28.9

-36.2

2.18.1

11.4

7.3

8.5

2.3

22.7

22.9

22.4

-50.5

-3.04.4

GDP 5.7 5.2 5.1 5.6 5.2

Source: Department of Statistics, Malaysia

Gross fxed capital ormation registered arobust growth o 22.7% in the third quarter(2Q 12: 26.1%), underpinned by capitalspending by both the private and publicsectors. Private investment grew by 22.9%

Consumer confidence improved further

Business Conditions IndexConsumer Sentiments Index

Source: MIER

0

20

40

60

80

100

120

140

1Q

2009

2Q 3Q 4Q 1Q

2010

2Q 3Q 4Q 1Q

2011

2Q 3Q 4Q 1Q

2012

2Q 3Q

Points

99

Quarterly BulletinThird Quarter 2012


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2011 2012

3Q 4Q 1Q 2Q 3Q

Annual change (%)

Agriculture

Mining

Manufacturing

Construction

Services

8.8

-5.9

5.4

4.0

7.1

6.9

-3.8

5.2

7.5

6.6

2.1

0.3

4.4

15.5

5.7

-4.7

2.3

5.6

22.2

6.6

0.5

-1.2

3.3

18.3

7.0

Real GDP

(Annual Change) 5.7 5.2 5.1 5.6 5.2

Real GDP

(Preceding Change) 3.7 1.8 -2.8 3.0 3.3


GDP by Economic Activity


robust (9.1%; 2Q 12: 9.5%), supported bycontinued demand or data communicationservices. The fnance and insurance sub-sectorexpanded strongly by 11.8% (2Q 12: 6.6%),reecting continued growth in net interest andee-based income. In the utilities sub-sector,growth was lower (3.8%; 2Q 12: 4.3%), asslower manuacturing activity resulted in lowerelectricity demand by industrial users. Growth inthe transport and storage sub-sector was alsolower (3.6%; 2Q 12: 5.8%), amidst slower tradeactivity due to the weaker external environment.

Share

2011

(%)

2011 2012

3Q 4Q 1Q 2Q 3Q

Annual change (%)

Intermediate Services 40.6 5.9 6.5 5.1 7.2 8.8

Finance & insurance

Real estate & business services

Transport & storage

Communication

17.0

10.0

6.8

6.8

5.3

4.6

6.1

8.9

7.1

4.4

6.0

8.8

2.0

6.9

5.9

9.4

6.6

7.6

5.8

9.5

11.8

7.2

3.6

9.1

Final Services 59.4 8.0 6.7 6.1 6.2 5.7

Wholesale & retail trade

Accommodation & restaurant

Utilities

Government services

Other services

26.6

4.5

4.7

14.3

9.4

8.4

6.3

4.5

11.5

4.3

6.8

6.3

3.6

10.4

2.5

6.4

6.1

5.0

7.1

4.3

5.9

6.8

4.3

8.4

4.3

4.4

4.0

3.8

11.0

3.8

Total Services 100.0 7.1 6.6 5.7 6.6 7.0


Performance of the Services Sector (value added at constant 2005 prices)

Growth across most economic sectorsmoderated

On the supply side, activity in most economicsectors moderated in the third quarter. Growth inthe manuacturing sector slowed, weighed downby the weaker external environment while themining sector contracted due to a sharp declinein natural gas production ollowing a prolongedplanned shutdown o several gas acilities ormaintenance purposes. In the agriculture sector,growth turned positive in line with the recoveryin crude palm oil production and strong outputo ood crops. The construction sector continuedto record robust growth, while growth in the

services sector expanded urther, driven by frmdomestic demand.

The services sector expanded urther in thethird quarter o 2012 (7.0%; 2Q 12: 6.6%), asgrowth continued to be driven by frm domesticdemand. The wholesale and retail tradesub-sector moderated to 4.4% (2Q 12: 5.9%),weighed down by the wholesale segmentamidst slower trade activity. Nonetheless,growth in the retail segment was sustained,supported by frm household spending. In the

communication sub-sector, growth remained


100


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2011 2012

3Q 4Q 1Q 2Q 3Q

Annual Change (%)

Value Added (RM million at

constant 2005 prices) 5.4 5.2 4.4 5.6 3.3

Overall Manufacturing Production1 5.4 4.9 4.6 5.8 3.5

Export-oriented industriesElectronics and electrical

products cluster

Of which:

Electronics

Electrical products

Primary-related cluster

Of which:

Chemicals and chemical

products

Petroleum products

Rubber products

Off-estate processing

Domestic-oriented industries

Construction-related cluster

Of which:

Construction-related

products

Fabricated metal products

Consumer-related cluster

Of which:

Transport equipment

Food, beverage & tobacco

products

4.0

-0.5

-3.9

4.0

6.5

9.7

1.7

15.5

9.9

10.0

19.1

13.1

27.5

3.5

-0.1

4.9

2.9

-3.0

-10.3

6.5

6.1

14.1

-1.1

9.5

13.8

11.4

12.3

8.3

17.5

10.7

8.5

9.8

3.0

0.0

-3.6

4.6

4.5

9.1

3.8

3.4

2.2

10.0

8.3

0.9

17.4

11.4

9.9

11.5

5.1

2.9

3.0

2.8

6.2

10.8

9.5

4.1

-15.4

8.2

4.8

2.6

7.6

11.3

14.6

10.2

2.3

1.2

5.1

-3.6

2.9

6.2

-0.2

2.2

2.5

7.0

10.5

1.6

21.5

4.1

12.7

1.9

1 Industrial Production Index (2005=100)


Performance of the Manufacturing Sector

Value-added growth in the manuacturingsector slowed to 3.3% (2Q 12: 5.6%), asproduction o both the export-oriented anddomestic-oriented industries moderated in thethird quarter. In the export-oriented industries,output o the E&E cluster registered a modestgrowth o 1.2% (2Q: 2.9%), weighed downby weaker output o electrical products.

In addition, there was a moderation inthe production o chemicals and chemicalproducts due to the weak external demandconditions. On the other hand, expansion indomestic-oriented industries was supportedby the perormance o the construction-relatedcluster, which continued to beneft rom robustdomestic construction activity.

Overall, the capacity utilisation rate in themanuacturing sector moderated marginally(81%; 2Q 12: 82%), reecting the soterproduction growth in the sector. Export- and

domestic-oriented industries operated at80% and 82% o total capacity respectivelyduring the quarter (2Q 12: 82% and 82%respectively).

2011 2012

2Q 3Q 4Q 1Q 2Q 3Q

Index

MIER Consumer Sentiments Index

MIER Retail Trade Index

MIER Tourism Market Index

107.9

120.8

125.4

108.7

150.0

115.2

106.3

92.6

126.0

114.3

85.3

125.2

114.9

119.4

117.3

118.3

130.2

129.9

Annual change (%)

Tourist arr ivals

Total passenger traffic at all airports

Total consumption credit outstanding

Loans outstanding to the wholesale & retail trade, hotels & restaurants

Imports of consumption goods

Total sales of motor vehicles

Container cargo handled (Port Klang and PTP)

-4.8

13.4

8.7

6.8

17.8

-9.7

9.6

4.7

10.8

8.5

9.6

26.4

0.6

9.8

5.4

7.0

9.5

11.5

25.2

-1.5

11.5

0.4

6.4

7.8

11.1

20.4

-12.6

7.4

4.3

1.9

7.5

11.1

10.7

17.3

4.2

n.a.

2.9

7.6

11.7

11.4

2.7

1.7

Source: Various sources

Selected Quarterly Indicators in the Services Sector

101



4/8

In the construction sector, growth remainedrobust in the third quarter (18.3%; 2Q 12:22.2%), driven by the civil engineering sub-sector. The pickup in progress o newer projectsnamely the MRT and Tanjung Bin power plantsupported the growth o the sub-sector, asdid other ongoing major inrastructure and oiland gas projects such as the Second PenangBridge, Janamanjung power plant, oshorepipelines or Gumusut-Kakap project andSabah-Sarawak Gas Pipeline. Growth in theresidential and non-residential sub-sectorsalso remained frm. While the growth o theresidential sub-sector was underpinned by theconstruction o high-end residential properties,the non-residential sub-sector was supportedby construction o industrial and commercialbuildings.

Performance of the Agriculture Sector

2011 2012

3Q 4Q 1Q 2Q 3Q

Annual change (%)

Value Added (at constant 2005 prices)

Industrial Crops

Of which:

Oil palm

Rubber

Food Crops

Of which:

Fishing

Livestock

8.8

10.7

12.5

15.1

6.2

3.6

11.9

6.9

7.8

16.9

-6.9

5.6

1.2

10.3

2.1

1.4

3.5

-9.4

2.8

-4.4

11.0

-4.7

-12.3

-17.5

-2.1

5.8

-0.2

7.7

0.5

-3.9

1.6

-15.6

6.4

4.7

7.1


2011 2012

3Q 4Q 1Q 2Q 3Q

Annual change (%)

Value Added


Production

Of which:

Crude oil and condensates

Natural gas

-5.9

-9.8-2.0

-3.8

-6.60.7

0.3

0.1-0.2

2.3

5.7-4.4

-1.2

0.0-3.3

Source: PETRONAS

Department of Statistics, Malaysia

Performance of the Mining Sector

2011 2012

3Q 4Q 1Q 2Q 3Q

Annual change (%)

Housing approvals

New housing sales and advertising

permits

Production1 of construction-related

materials

Structural metal products

Iron and steel

Structural non-refractory clay and

ceramic products

Ready-mix concrete

Loans for construction activity

Approval

Disbursement

54.1

6.0

19.1

65.5

2.1

-2.4

38.7

-19.9

-4.7

29.8

22.4

12.3

41.4

1.0

2.5

35.3

64.4

17.9

75.6

12.5

8.3

49.2

-11.7

3.3

18.2

38.2

16.0

126.9

13.9

4.8

3.1

-2.0

8.9

23.8

-9.0

17.9

3.2

25.6

10.5

40.1

-5.3

4.3

18.2

5.3

49.0

1 Industrial Production Index (2005=100)

Source: Ministry of Housing and Local Government, Department of Statistics, Malaysia and

Bank Negara Malaysia

Indicators for the Construction Sector

Capacity utilisation rate in the manufacturing sector*

Overall

IPI (RHS)

Domestic-oriented industries

Export-oriented industries

* Beginning 2012, the capacity utilisation rate in the manufacturing sector has

been rebased from value-add in year 2006 to value-add in year 2009

Source: Bank Negara Malaysia & Department of Statistics, Malaysia

80

85

90

95

100

105

110

115

120

125

45

50

55

60

65

70

75

80

85

90

1Q

2008

2Q3Q 4Q1Q

2009

2Q3Q 4Q1Q

2010

2Q3Q 4Q1Q

2011

2Q3Q 4Q1Q

2012

2Q3Q

% Index

Value-added growth o the agriculturesector turned around to expand by 0.5%(2Q 12: -4.7%), due mainly to a recovery inthe production o crude palm oil and strongproduction o ood crops. The mining sectorhowever, contracted by 1.2% (2Q 12: 2.3%),reecting a sharp drop in natural gas productionollowing a prolonged planned shutdown oseveral gas acilities or maintenance purposes.

Infation continued to moderate

The headline ination rate, as measured by theannual change in the Consumer Price Index(CPI), moderated to 1.4% in the third quarter(2Q 12: 1.7%), reecting lower ination in thetransport, recreation services and culture andmiscellaneous goods and services categories.

Ination in the transport categorymoderatedto 0.2% (2Q 12: 0.5%) as the impact rom thedownward adjustment to the price o RON97petrol in July more than oset the impact romthe subsequent upward adjustments in Augustand September. Ination in the recreation


102


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2011 2012

3Q 4Q 1Q 2Q 3Q

RM billion

Current Account

(% of GNI)

Goods

Services

Income

Current transfers

Financial Account

Direct investment abroad

Foreign direct investment

Portfolio investment

Financial derivatives

Other investment

- Official sector

- Private sector

Errors & omissions

27.4

12.5

37.7

-1.1

-3.9

-5.3

-22.5

-13.0

9.1

-28.0

-0.3

9.7

-0.5

10.2

6.0

22.4

10.0

36.8

-3.8

-5.3

-5.4

-0.2

-14.7

6.5

-2.7

-0.3

11.0

-0.1

11.1

-15.9

18.1

8.3

35.8

-3.8

-8.6

-5.3

-10.3

-16.9

7.5

25.3

0.0

-26.1

-0.5

-25.6

-14.9

9.6

4.4

29.4

-3.6

-11.7

-4.6

5.4

-2.5

6.1

-5.0

1.0

5.9

-0.3

6.1

-2.2

9.5

4.2

25.5

-3.4

-7.9

-4.7

-8.7

-7.7

9.6

27.6

-0.1

-38.1

0.0

-38.0

-8.3

Overall Balance 10.9 6.2 -7.2 12.7 -7.5

Source: Department of Statistics Malaysia

Balance of Payments

services and culture category was lower as theimpact rom the increase in satellite televisionservices charges in mid-July 2011 dissipated(3Q 12: 0.5%, 2Q 12: 1.3%). Ination in themiscellaneous goods and services categorydeclined to 1.4% during the quarter (2Q 12:2.3%) reecting mainly slower increase in theprices o jewellery.

Food ination remained relatively stable duringthe quarter at 2.6% (2Q 12: 2.7%). The slight

moderation in ination reected the declinein prices in themeatcategory (3Q 12: -3.1%;2Q 12: -1.9%) and slower price increases inthe fsh and seaood category (3Q 12: 7.3%;2Q 7.6%) due partly to the implementation othe Governments estive season price controlscheme in July and August.

The Producer Price Index (PPI) declined by0.7% on an annual basis in the third quarter(2Q 12: 0.8%). In terms o composition, priceso commodity-related components declinedby 2.7% (2Q 12: 1.7%) while prices o non-commodity-related components increased by0.6% (2Q 12: 0.2%) during the quarter. Priceso local components declined by 1.1% (2Q 12:0.8%) while prices o imported componentsincreased at a slower rate o 0.7% (2Q 12:0.8%).

Labour market conditions remainedfavourable

Overall labour market conditions remainedpositive during the quarter. Total employmentin July and August averaged 12.67 millionpersons, representing a net job creationo 169,450 jobs rom the second quarter.Unemployment rate improved to 2.9% or thefrst two months o the quarter (2Q 12: 3.0%).

However, retrenchment increased marginally to1,767 persons rom 1,516 persons recorded in

the preceding quarter, with the manuacturingsector accounting or 78% o total layos,mostly in the export-oriented industries.

Labour demand during the quarter was alsosustained, as reected in the higher number ojob vacancies posted in the JobsMalaysia Portal(453,893 positions; 2Q 12: 419,636 positions).The construction sector accounted or the bulko the increase in job openings, in line withthe sectors robust growth. Real wages in themanuacturing sector recorded a lower growth

o 3.8% as compared to the preceding quarter(2Q 12: 5.2%).

Sustained current account surplus

The current account surplus narrowed slightly inthe third quarter to RM9.5 billion, equivalent to4.2% o GNI, as the goods surplus was partiallyoset by net income payment and services defcit.

Labour Market Conditions

Vacancies (LHS) Re trenchments (RHS)

Vacancies ('000 positions) Retrenchments (persons)

Note: : Beginning 2012, vacancies data reflected a technical review

Source: Ministry of Hu man Resources

0

1,000

2,000

3,000

4,000

0

100

200

300

400

500

600

700

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q

2010 2011 2012

Contribution to Consumer Price Inflation

2Q 12 3Q 12

Source: Bank Negara Malaysia

-0.5 0.0 0.5 1.0 1.5 2.0

All Items

Food and non-alcoholic beverages

Housing, water, electricity, gas and other fuels

Miscellaneous goods and services

Restaurants and hotels

Furnishings, household equipment androutine household maintenance

Transport

Education

Recreation services and culture

Health

Alcoholic beverages and tobacco

Clothing and footwear

Communication

percentage points

103



6/8

Gross exports growth turned negative (-1.5%)in the third quarter on account o the declinein the exports o manuactured goods andcommodities. The contraction in manuacturedexports was due mainly to weaker externaldemand or E&E products rom both theadvanced and regional economies. Exports oresource-based manuactured products andcommodities also declined, reecting lowercommodity prices and soter demand romregional economies. Nonetheless, exports ominerals continued to expand, supported bysustained demand or and high prices o naturalgas.

Gross imports continued to expand (+7.3%),albeit at a slower pace, due mainly to sustainedhigh imports o capital and consumption goods.Growth o capital imports was supported byimports o machineries and aircrats, reectingcontinued investment activity in the domesticeconomy. Imports o consumption goods weresustained due mainly to higher imports oprocessed ood and beverages and non-durableconsumer goods. However, intermediateimports contracted urther in tandem with thedecline in manuactured exports.

Defcit in the services account was slightlylower at RM3.4 billion in the third quarter.The lower defcit was mainly attributable tolower net payments or transportation servicesamidst higher net travel receipts. The defcitin income account narrowed to RM7.9 billion,arising rom higher investment income accruedto Malaysian companies investing abroad and

2011 2012

3Q 4Q 1Q 2Q 3Q

Annual change (%)

Gross Exports

Manufactured

E&ENon-E&E

Commodities

Agriculture

Minerals

Gross Imports

Capital goods

Intermediate goods

Consumption goods

Trade balance (RM billion)

11.7

4.9

-4.015.9

29.6

45.0

19.4

7.3

5.4

3.7

26.4

30.6

9.8

2.2

-5.010.3

28.8

18.9

36.6

6.8

2.8

2.4

25.2

32.2

3.9

1.2

-1.74.2

9.1

-8.0

20.9

6.8

18.3

-1.4

20.4

29.8

2.8

2.1

-2.46.7

3.7

-12.5

16.3

8.7

27.1

-0.2

10.7

21.3

-1.5

-1.3

-1.7-0.8

-3.0

-21.4

11.8

7.3

22.6

-3.1

11.4

17.2

Source: MATRADE and Department of Statistics, Malaysia

Trade Account

2011 2012 2011 2012

3Q 4Q 1Q 2Q 3Q 3Q 4Q 1Q 2Q 3Q

Annual change (%) Share of total exports (%)

United States

European Union (EU)

Selected ASEAN countries1

North East Asia

People's Republic of China

Hong Kong SAR

Chinese Taipei

Korea

West Asia

India

Total exports

-3.6

6.3

10.1

15.1

27.4

-2.2

5.6

6.2

11.9

36.0

11.7

-3.5

3.9

5.6

9.4

15.4

-7.3

13.1

8.5

6.5

33.7

9.8

5.5

-10.4

9.3

-3.1

-3.4

-8.1

-6.0

5.8

-4.8

-5.1

3.9

3.8

-8.9

10.3

0.5

9.2

-3.2

-7.5

-15.2

-0.9

7.6

2.8

8.3

-19.2

10.6

-7.6

-11.6

0.2

-1.6

-6.7

2.5

0.7

-1.5

8.3

10.3

23.8

25.4

14.2

4.5

3.2

3.5

3.4

4.3

100.0

8.0

10.2

24.3

24.2

13.0

4.2

3.4

3.6

3.5

4.0

100.0

8.3

9.1

25.8

22.9

11.9

4.0

3.0

4.0

3.4

3.6

100.0

8.6

9.0

26.2

24.1

13.2

4.4

3.1

3.4

3.6

4.2

100.0

9.2

8.5

26.7

23.8

12.7

4.6

3.2

3.3

3.6

4.3

100.0

1Singapore, Thailand, Indonesia, Philippines, Brunei Darussalam and Vietnam


Malaysia: Direction of Exports

lower investment income accrued to oreigndirect investors in Malaysia. During the quarter,higher profts were mainly reected by highprofts o Malaysian companies investing in thefnancial and oil and gas sectors abroad.

The fnancial account turned around to record anet outow o RM8.7 billion in 3Q 12(2Q 12: +RM5.4 billion) as net inows in FDIand portolio investment were outweighed bynet outows o direct investment abroad andother investment.

Portolio investment turned around rom a smallnet outow position to record a net inow o

RM27.6 billion during the quarter (2Q 12: -RM5billion). Given Malaysias avourable growthprospects and sound economic undamentals,the resumption o inows is attributable toinvestors continued search or higher returns in


104


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External Debt Outstanding

2011 2012

end-Sept end-June end-Septp

RM billion

Medium- and long-term debt

Public sector

Private sector

Short-term debt1

Total external debt

USD billion equivalent

157.8

88.5

69.3

105.5

263.3

81.8

159.2

87.3

71.9

110.1

269.3

83.5

156.9

84.8

72.1

100.9

257.8

83.3

External debt/GNI (%)

Reserves/Short-term external debt (times)

30.6

4.0

29.7

3.9

28.4

4.22

1 Excludes currency and deposits held by non-residents with resident banking institutions

2 Based on international reserves as at 31 October 2012p Preliminary

Source: Ministry of Finance, Malaysia and Bank Negara Malaysia

the region. In addition, the higher inows alsoreected the markets reaction to the additionalmonetary policy easing by the advancedeconomies. Other regional economies alsoexperienced portolio inows during the quarter.

FDI recorded a larger net inow o RM9.6billion (2Q 12: +RM6.1 billion) ollowinghigher earnings retained by the multinationalcompanies (MNCs) in Malaysia as well aslarger inows o equity capital. FDI inowscontinued to be broad-based during thequarter, the bulk o which were undertaken bycompanies in themanuacturing and oil andgas sectors.

Direct investment abroad (DIA) by Malaysiancompanies was also higher at RM7.7 billion inthe third quarter (2Q 12: -RM2.5 billion). Thehigher net DIA outow reected larger outowso equity capital amidst sizeable earningsretained by Malaysian companies operatingabroad. DIA were mainly channelled into theservices sector, particularly the fnance andinsurance, wholesale and retail trade andreal estate activities sub-sectors. There werealso sizeable investments abroad by domestic

companies in the oil and gas sector.

Other investment registered a net outow oRM38.1 billion in the third quarter (2Q 12:+RM5.9 billion). The outows were accountedmainly by interbank placements by domesticbanking institutions with oreign counterpartsamidst an environment o ample global liquidity.There were also sizeable outows arising romcontinued extension o trade credits. The oicialsector registered a small net outow, due tocontinued repayment o external loans.

Given the net outow position in the fnancialaccount amidst lower current account surplus,the overall balance o payments turned

around to record a defcit o RM7.5 billion in3Q 2012 (2Q 12: +RM12.7 billion). The errorsand omissions amounted to -RM8.3 billionand largely reected the oreign exchangerevaluation loss on external reserves during thequarter, ollowing the appreciation o the ringgitagainst major currencies.

Lower external debt

Malaysias total external debt decreased toRM257.8 billion at end-September 2012 (end-June 2012: RM269.3 billion). This is equivalentto 28.4% o GNI and accounted or only 11.8%o total debt2.

Medium- and long-term external debt was lowerat RM156.9 billion (end-June 2012: RM159.2billion), as the strengthening o ringgit againstmajor and regional currencies during the quartermore than oset net drawdown o externalborrowings, particularly by the private sector. Asat end-September 2012, the short-term externaldebt was also lower at RM100.9 billion duemainly to net repayment o interbank borrowing.

2 Total debt comprises domestic and external debt. Domestic debt comprises loans by banking system, private debt securities and

Federal Government debt.

105



8/8

International reserves remained high

The international reserves o Bank NegaraMalaysia amounted to RM421.3 billion(equivalent to USD137.5 billion) as at 28September 2012. This reserves level hastaken into account the quarterly adjustment ororeign exchange revaluation loss, ollowingthe strengthening o ringgit against major andregional currencies during the third quarter.As at 31 October 2012, the reserves positionamounted to RM423.9 billion (equivalent toUSD138.3 billion), suicient to fnance 9.3months o retained imports and is 4.2 times the

short-term external debt.

2011 2012p

3Q 4Q 1Q 2Q 3Q

RM billion

Revenue % annual growth

Operating expenditure

% annual growth

Current account

% of GDP

Gross development expenditure

% annual growth

Overall balance

% of GDP

48.312.1

48.8

26.6

-0.5

-0.2

12.6

0.3

-12.8

-5.7

47.74.0

54.5

23.6

-6.9

-3.0

19.1

-8.4

-25.4

-11.1

47.920.4

45.6

18.0

2.3

1.0

8.5

32.3

-5.8

-2.6

50.72.2

48.2

18.8

2.5

1.1

10.3

24.0

-7.8

-3.3

52.17.8

50.1

2.5

2.0

0.9

10.9

-13.0

-8.8

-3.7

Memo item:

Total net expenditure

% annual growth

Total Federal Government debt

(as at end-period)

% of GDP

Domestic debt

% of GDP

External debt

% of GDP

61.1

20.0

440.8

50.0

422.8

48.0

18.1

2.1

73.0

14.1

456.1

51.8

438.0

49.7

18.1

2.1

53.7

19.4

470.8

50.3

453.9

48.5

16.9

1.8

58.5

19.9

476.7

50.9

458.8

49.0

17.9

1.9

60.9

-0.4

484.6

51.8

467.4

49.9

17.3

1.8

p Preliminary

Source: Ministry of Finance

Federal Government Finance

Federal Government Finance

p Preliminary

Source: Ministry of Finance

-30

-20

-10

0

10

20

30

40

50

60

3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q

RM billion

Overall balance

Development expenditure

Revenue

Operating expenditure

2010 2011 2012p

Res erv es Ret ained i mp ort co ver (RHS ) Res erv es/ ST ex t d eb t (RHS )

Net International Reserves (as at end period)

Source: Bank Negara Malaysia

20112010 2012

0

2

4

6

8

10

12

60

70

80

90

100

110

120

130

140

150

A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O

Month/TimesUSD billion

as at 31 Oct 12:

USD138.3 billion

9.3 months

4.2 times

Steady revenue growth supportedGovernment expenditure

In the third quarter, the Federal Governmentrevenue increased to RM52.1 billion(2Q 12: RM50.7 billion), supported by income

tax collection. The higher revenue wasadequate to sustain the moderate increase inoperating expenditure, which was driven byhigher emolument payments. Developmentexpenditure amounting to RM10.9 billion(2Q 12: RM10.3 billion) were disbursedprimarily to the transportation and public utilitiessectors. Overall Government expenditure stood

at RM60.9 billion (2Q 12: RM58.5 billion),resulting in a defcit o RM8.8 billion (-3.7% o

GDP) during the quarter (2Q 12: RM7.8 billion,-3.3% o GDP). The defcit was fnanced bydomestic borrowings. As at end-September2012, total outstanding debt o the FederalGovernment stood at RM484.6 billion or 51.8%o the estimated 2012 GDP.


106

Bank Negara Quaterly Bulletin 3rd Quarter 2012

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Transcript of Bank Negara Quaterly Bulletin 3rd Quarter 2012