Services Sector To Register Higher Growth This Year

KUALA LUMPUR, March 24 (Bernama) -- The services sector is expected to register a higher growth of 4.9 per cent this year and will remain the key contributor to overall gross domestic product growth.

Bank Negara Malaysia (BNM), in its its Financial Stability and Payment Systems Report 2009 released here today, said growth will be broad-based, with most sub-sectors recording better performance compared to last year.

The trade and manufacturing-related sub-sectors, which were adversely affected by the economic downturn last year, are expected to improve, in line with the anticipated recovery in the global economy, it said.

Meanwhile, the more domestic-oriented sub-sectors are expected to record higher growth, benefiting mainly from strengthening domestic demand.

Within the services sector, BNM said the finance and insurance sub-sector is expected to register higher growth, mainly supported by the finance segment, which will benefit from increased bank lending and higher fee income as the economic recovery gathers momentum.

In the insurance segment, the improvements in salaries and wages as well as enhanced financial literacy will contribute to increased demand for life insurance products while the anticipated increase in the sales of motor vehicles will benefit the general insurance business.

After being adversely affected by the economic downturn in 2009, the transport and storage sub-sector is projected to return to positive growth in 2010.

It said growth will emanate from higher demand for cargo-related transportation services, following the anticipated improvement in trade and manufacturing-related activities.

Growth will be further supported by improved demand in the passenger segment, in line with the expected higher tourist arrivals and improvement in domestic tourism activity.

Similarly, the utilities sub-sector, which weakened considerably in 2009, is expected to expand favourably this year.

The central bank said growth will be contributed by increased demand for electricity from the industrial users, in line with the improvement in manufacturing activity, as well as steady demand from the commercial and household sectors.

The manufacturing sector is poised for strong growth in 2010, based on the observed momentum of recovery since end-2009, it said, adding that broad-based expansion is expected across all clusters, reflecting improved external demand and strengthening domestic demand.

The central bank said the agriculture sector is forecast to register a higher growth of 3.1 per cent as demand from major export markets for industrial crops, especially palm oil and rubber, improves with better economic prospects this year.

The mining sector is projected to expand by 2.5 per cent, reflecting higher output of both crude oil and natural gas following the recovery in demand.

The construction sector is expected to maintain a growth of 3.7 per cent in 2010, it said.

-- BERNAMA