KUALA LUMPUR, Aug 24: Malaysia’s growth eased to 4.1 per cent year-on-year in the three months to June, from 5.8 per cent in the first quarter, due to declines in the manufacturing and mining sectors, the central bank said on Wednesday.

But central bank governor Zeti Akhtar Aziz was upbeat when asked whether the economy remains on track to expand by a forecast 5.0-6.0 per cent

this year despite spiralling oil prices.

“The underlying prospects of the economy remain good. The economy grew 4.9 per cent in the first half. The outlook for the second half should be more favourable,” she told reporters.

“Private-sector activity continued to be the main driver of growth in the three months to June,” she added.

Domestic demand rose 5.6 per cent, underpinned by strong private spending and a continued increase in private investment activity.

On the supply side, the services sector maintained its strong performance with 5.4 per cent expansion, she said.

Zeti said slower growth was experienced in the manufacturing sector, with 3.2 per cent expansion, while the output in the mining sector declined 1.6 per cent due to the shutdown of oil fields and plants for maintenance.

Growth in the construction sector continued to decline at a moderate rate of 2.0 per cent.

The central bank chief warned that full-year inflation could be higher than the projected 2.8 per cent if oil prices increased more than expected.

Zeti also said that despite higher petroleum-related expenditures, improved revenue collection contained the fiscal deficit at 2.7 billion ringgit or 2.3 per cent of GDP in the second quarter.

Malaysia’s external position remained strong with the trade balance recording a large surplus of 22.9 billion ringgit, she said.

Gross exports grew at 10.8 per cent, supported by robust growth in minerals and reinforced by expansion in exports of manufactured goods and agricultural commodities.

Zeti also said that gross inflows of foreign direct investments increased to 8.7 billion ringgit in the second quarter from five billion ringgit in the first, focused mainly on the oil and gas services sector.

Portfolio investment recorded a higher net inflow of 4.5 billion ringgit against 2.8 billion in the preceding quarter, mainly reflecting sustained foreign interest particularly in debt securities, she said.—AFP