Malaysia's economy growth moderated to 4.0 percent in the second quarter of the year but remained in line with the official target, the central bank said on Friday.

The Malaysian economy registered a growth of 4.0 percent in the second quarter compared with the 4.2 percent growth in the first quarter.

"Despite the stronger expansion in domestic demand, growth was weighed down by the continued decline in net exports and a significant drawdown in stocks," the central bank said in a statement.

On the supply side, growth continued to be driven by the major economic sectors, while the private sector activity remained the key driver of growth, expanding at a faster pace of 6.1 percent in the second quarter, said the central bank.

The Consumer Price Index (CPI), which measures inflation, declined to 1.9 percent in the second quarter due mainly to the lapse of the impact of the Goods and Services Tax (GST), which was implemented in April 2015.

On trade, gross export recorded a higher growth of 1.4 percent, up from 1.0 percent in the previous quarter, driven mainly by a smaller contraction in the growth of commodity exports which offset the slower manufactured export growth.

The central bank's Monetary Policy Committee reduced a key policy rate by 25 basis points to 3.00 percent in mid-July, in a bid to support growth against an environment of increased downside risks to global growth.

In all, Malaysia's economy grew by 4.1 percent in the first half of 2016. The central bank expected the growth to be in line with the government prediction of 4 to 4.5 percent this year, mainly driven by domestic demand.

It added that exports are projected to remain weak given the subdued global demand, warning that uncertainties in the external environment may pose downside risks to Malaysia's growth prospects despite resilient domestic conditions.

Source : XINHUA