Malaysias economy expands at fastest pace in a year

Aug. 30 | Updated: Aug 31 2006, 05:30am hrs
Malaysias economy expanded at the fastest pace in more than a year as exports of electronics increased and companies spent more on factories.

Southeast Asias third-largest economy grew 5.9% in the second quarter from a year earlier after a revised 5.5% gain in the previous three months, the central bank said in Kuala Lumpur on Wednesday. Thats more than the median 5.6% forecast in a Bloomberg News survey of 20 economists and is the fastest pace since the first quarter of 2005.

Rising global demand for digital music players and mobile phones that can play videos and surf the Internet is giving a lift to Asian technology exporters including Malaysia, a production base for Intel Corp. semiconductors and Dell Inc. notebook computers. Thats also encouraging foreign and local companies to increase investment in electronics factories and other industries.

Domestic investments have picked up a little bit, said Mohamed Ariff Kareem, executive director of the Malaysian Institute of Economic Research. Weve seen some improvement in foreign direct investment as well.

Foreign investment jumped to 2.5 billion ringgit ($680 million) in the second quarter from 1.3 billion ringgit in the first three months of this year, the central bank said on Wednesday.Approvals for investments in manufacturing projects in Malaysia rose 18% to 12.5 billion ringgit from a year earlier in the second quarter, CIMB Securities Sdn. said in a research note on Aug. 9, citing data from the governments investment promotion agency.

Rising exports and domestic spending also helped lift growth in Malaysias $131 billion economy in the second quarter, CIMB chief economist Lee Heng Guie said before todays release.

Malaysias industrial production growth accelerated to 7% in June, the fastest pace in four months.