PUTRAJAYA, May 28 — Malaysia attracted RM7.5 billion in foreign direct investment during the first quarter of the year, down by over 25 per cent from the RM10.1 billion reported for the same period last year as economic woes continue in tightly-linked markets such as China and Europe.
Although FDI totalled RM36.6 billion last year on the back of a strong first two quarters, it dropped by close to 50 per cent for the rest of 2011 as growth in China cooled and the eurozone continued to grapple with the threat of a Greek default.
International Trade and Industry Minister Datuk Seri Mustapa Mohamed (picture) told reporters today, however, that the figure recorded for the first three months of this year was still higher than the RM6.5 billion in the last quarter of 2011.
“We are still on track to match last year,” he insisted.
Analysts have warned Malaysia to brace for a significant slowdown in Malaysia due to rising linkages with top trade partners including China, the world’s second largest market which economists say is headed for a sixth consecutive quarterly drop in growth with worse to come.
RHB Research Institute suggested today that a 10 per cent decline in exports due to sinking global demand could push down Malaysia’s gross domestic product (GDP) by 1.2 per cent.
Malaysia’s economy grew at a slower pace of 4.7 per cent in the first quarter compared with 5.2 per cent in the previous quarter as global economic conditions continued to be challenging, Bank Negara announced on May 23.
It was the third straight quarterly drop since the 7.2 per cent recorded in Q2 2011.
Mustapa said the trade and investment outlook was now “uncertain” until Greece completed its elections and a new government decided on how to tackle its sovereign debt crisis.
“But our forecast has already factored this into account,” he said.