KUALA LUMPUR, Aug 15 — Malaysia’s economy grew 6.4 per cent in the second quarter, faster than expected, as exports kept up their strong performance and consumer spending stayed buoyant despite steps by the central bank to curb high household debt levels.

The stronger than expected figure will firm expectations that the central bank could follow up July’s hike in interest rates — the first in three years — with another as early as next month in order to dampen household debt. The Malaysian ringgit extended its gains to hit a session high of 3.1635 against the dollar after the GDP data was released.

Gross domestic product in the April-June period accelerated from 6.2 per cent in the first quarter, while the current account surplus narrowed as imports grew more slowly and exports remained brisk. A Reuters poll of analysts had forecast Malaysia’s gross domestic product would grow 5.8 per cent in the second quarter.

“The very strong export performance was better than expected,” Bank Negara Governor Zeti Akhtar Aziz told a news conference. “It’s very likely that the overall growth for the year will exceed growth projections made earlier.”

Zeti added that the central bank’s efforts to curb consumer debt were working as intended, noting a recent “moderation” in household debt.

“If we were to be overly stringent in our policies it will result in an over adjustment,” she said.

To curb the ballooning debt, the central bank raised its interest rate from 3 per cent to 3.25 per cent in July. Economists believe it will have to do more to dissuade borrowers.

“This definitely provides more room for Bank Negara Malaysia to hike the interest rate,” Irvin Seah, an economist with DBS in Singapore, said of the strong GDP figures.

“From Malaysia’s perspective, all cylinders are firing — exports improving, domestic growth is strong, and that certainly calls for tighter monetary policy.”

The current account surplus narrowed to RM16 billion (US$5 billion) from RM19.8 billion in the previous quarter.

Exports from the trade-dependent Southeast Asian nation rose 8.8 per cent in the quarter, led by sales of electronics and manufactured products, outstripping the 7.9 per cent rise in the first quarter. Import growth slowed to 3.9 per cent from 7.1 per cent in the first three months of the year. — Reuters