Bank Negara governor Zeti Akhtar Aziz said that economic growth was led by the private sector and supported by strong performances from the manufacturing, services and agriculture sectors.

"The economy continues to churn in robust domestic demand despite inflationary pressure with consumer income rising and financing remaining favourable for the first four months," she said.

During the first quarter, manufacturing activities expanded by 8.0 percent year-on-year "in line with a recovery in the global semiconductor cycle," she told a news conference.

"This strong performance was led mainly by stronger growth in the electronics and electrical products industry with all major categories of products recording growth."

Agriculture grew by 7.3 percent year-on-year in the first quarter against a contraction of 1.5 percent in the preceding quarter.

The services sector also grew by 5.2 percent in the first quarter, supported by trade, consumption and tourism-related activities.

The central bank said that private consumption spending remained strong, increasing by 7.5 percent during the quarter despite hikes in the retail price of fuel and gas, and a decline in purchases of new passenger cars.

"In the first quarter of 2006, economic indicators continued to point toward sustained economic growth, supported by sustained private sector demand and strong economic growth in the global and regional economies," it said.

The inflation rate, which reached a six-year high in March at 4.8 percent following steep fuel price hikes, is expected to "remain at an elevated level for some time" she said.