The Malaysian economy registered a strong growth of 8.9 percent in the second quarter of 2010

The Malaysian economy registered a strong growth of 8.9 percent in the second quarter of 2010, driven by sustained expansion in domestic demand and continued robust growth in external demand.

Given the first-quarter economic growth of 10.1 percent, this brings the country's economic growth to 9.5 percent in the first half of 2010.

Bank Negara Malaysia, the country's central bank, said in a statement here on Wednesday that the stronger domestic demand was due to higher private and public sector spending, while the expansion in external demand spurred domestic production.

The bank said that during the quarter, domestic demand had expanded by nine percent, compared to only 5.3 percent in the previous quarter.

This was due mainly to higher private consumption that grew by 7.9 percent, supported by the favorable labor market conditions, relatively low inflation and a steady increase in income levels, the bank added.

"The public sector contributed positively to growth, with public consumption expanding by 6.9 percent during the quarter, following higher expenditure and emoluments.

"Gross fixed capital formation also increased, registering a stronger growth of 12.9 percent, compared to 5.4 percent in the first quarter," said the bank.

The bank attributed the increase in gross fixed capital formation to further improvement in private sector investment activity and sustained public sector capital expenditure.

On the supply side, the bank noted that major economic sectors had registered strong expansion during the second quarter, driven by the manufacturing and services sectors.

"The manufacturing sector expanded at a sustained pace of 15.9 percent, with broad-based growth across all clusters.

"The services sector grew strongly by 7.3 percent, supported mainly by the strong performance of the wholesale and retail trade; finance and insurance; and transport and storage sub-sectors," added the bank.

While the construction sector had expanded by 4.1 percent, the bank said the growth in the agriculture sector had moderated to 2. 4 percent due to lower production of industrial crops.

In the first quarter, these sectors had grown by 17 percent, 8. 5 percent, 8.7 percent and 6.8 percent respectively.