Malaysian economy defies oil price slide, but bumps lie ahead

KUALA LUMPUR, Feb 12 (Reuters): Malaysia's economy defied sliding oil and commodities prices to grow at its fastest pace in four years in 2014, underpinned by strong construction and manufacturing activity.
The net energy exporter, however, may start to feel the full brunt of weaker global oil and gas prices on its income in the months ahead, analysts say, and the authorities have few options to stimulate demand either with fiscal or monetary policy.
Strong economic growth could help dampen dissent over the imprisonment of opposition leader Anwar Ibrahim, who was jailed this week on a sodomy charge that many people believe was politically motivated. But the government also faces pressures over a heavily-indebted investment fund 1MDB and the risk that its weak fiscal position could trigger a sovereign downgrade.
Gross domestic product for the fourth quarter grew 5.8 per cent, exceeding the median forecast of 5 per cent in a Reuters poll, and picking up from 5.6 per cent in the third quarter.
"The reason why Malaysia has been able to ride out this challenging period is because we have a diversified economy," Bank Negara Malaysia's governor Zeti Akhtar Aziz told a news conference on Thursday.
The stronger-than-expected momentum lifted full-year growth in 2014 to 6.0 per cent, the fastest pace since 2010, and beat economists' forecast of 5.8 per cent.