KUALA LUMPUR (BLOOMBERG) – Malaysia’s economy grew at the fastest clip in a year, powered by a surge in consumption underpinning the recovery of services and manufacturing, boosting the central bank’s scope to stay focused on fighting inflation.

Gross domestic product (GDP) expanded 8.9 per cent in the April-June period from a year ago, according to Bank Negara Malaysia. That is stronger than the median 7 per cent growth seen in a Bloomberg survey. Output rose 3.5 per cent from the first quarter against a median estimate of a 1 per cent growth.

Malaysia’s economy is gaining traction as pent-up demand from the easing of mobility restrictions, lower unemployment and firmer prices for the country’s commodity exports lifts government revenue.

The government now expects full-year GDP growth at the upper end of its forecast of between 5.3 per cent and 6.3 per cent, central bank Governor Nor Shamsiah Mohd Yunus said at a briefing in Kuala Lumpur on Friday (Aug 12).

At the same time, headline inflation will probably average closer to the top end of a 2.2 per cent to 3.2 per cent range, the governor said, adding that monetary policy continues to be accommodative after raising the policy rate by a total of 50 basis points since May.

Any adjustments to monetary policy would be done in a “measured and gradual manner to support a sustainable economic growth”, Ms Shamsiah said. Rate adjustments would also “pre-emptively manage the risk of excessive demand on price pressures”, she said.

Rising price pressures from the reopening may support another quarter-point rate hike in September, analysts, including Winson Phoon from Maybank Securities, said before the GDP report.

Private consumption jumped 18.3 per cent in the second quarter from a year ago, compared with the 5.5 per cent growth in the period January to March while both private and government investment rose.

The services sector expanded 12 per cent, accelerating from 6.5 per cent growth in the first quarter while manufacturing growth quickened to 9.2 per cent from 6.6 per cent.

“We have enough tailwinds in the domestic consumption and investment and these will offset the moderation in growth in the second half of the year,” Ms Shamsiah said. “We are sticking to our growth forecast,” she said.