24/05/2012 (Bernama) - Malaysia's GDP grew 4.7 per cent in first quarter 2012 compared with 5.1 per cent in the same quarter 2011 and 5.2 per cent in the fourth quarter.

Bank Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz said domestic demand remained firm, supported by both private and public sector economic activity while exports moderated amid weaker external demand.

"The first quarter normally shows negative growth. It is usually the lowest compared to the fourth quarter, which is actually the highest performing quarter," she told a press conference on the country's economic performance here Wednesday.

She said based on current assumptions, the country would achieve 4.0-5.0 per cent growth this year.

"It still remains within the range. If conditions deteriorate, then it will be closer to four per cent. If the current condition prevails, it would be mid-way in the range and if it improves, then it will be closer to five per cent.

"This is of course on the assumption that there would not be a total collapse of the euro zone, and we believe that the international community, in particular the leaderships in the euro zone countries, will continue to provide a solution to the current problem," she said.

Elaborating on the first quarter, Zeti said domestic demand remained resilient, increasing by 9.6 per cent (4Q11: 10.4 per cent), while growth of private consumption remained strong at 7.4 per cent (4Q11: 7.3 per cent).

On the supply side, growth in most major economic sectors moderated, as the more modest growth in export-oriented activity more than offset the sustained growth in domestic-oriented activity.

Both the services and manufacturing sectors moderated further in the first quarter, reflecting the more modest growth in trade-related activity and continued expansion in domestic-related activity.

Growth in the construction sector strengthened further, supported by the implementation of civil engineering projects and development of residential projects.

The agriculture sector moderated on account of slower production of crude palm oil and rubber, while the mining output turned around to record a marginal growth.

In the external sector, Zeti said the current account surplus narrowed in the first quarter, but remained sizeable at RM18.1 billion, equivalent to 8.4 per cent of gross national income.

The ringgit appreciated by 3.6 per cent against the US dollar in the first quarter, in line with the trend of other regional currencies.

Financial stability was maintained throughout the first quarter of the year, underpinned by sound financial institutions and orderly financial market conditions.

"Going forward, the European sovereign debt crisis remains a risk to the global economy.

"The continued high oil prices, driven mainly by geopolitical tensions, further adds to uncertainty in the global environment," Zeti said.

Nevertheless, the ongoing gradual recovery in the US is expected to provide an upside potential to global growth prospects.

For Asia, while economic activity may be affected by external developments, growth will continue to be underpinned by sound domestic macroeconomic fundamentals and policy flexibility.

For the Malaysian economy, while the challenging external environment will remain risk to Malaysia's growth prospects, domestics demand is expected to remain resilient.

"The continued expansion in spending by private sector, further supported by public sector expenditure, are expected to underpin the overall growth performance," Zeti said.