KUALA LUMPUR (Aug 22): International Trade and Industry Minister Datuk Seri Mustapa Mohamed expects moderation in Malaysia’s economic growth in the second half of the year, following the country's strong gross domestic product (GDP) growth during the second quarter of the year.

“Although there is a lot of optimism in the air because of the good numbers, there is a lot of uncertainty. For now, we are expecting moderation in the second half of the year,” he told the press on the sidelines of the Asia Business First Forum 2017 today.

Mustapa said the official GDP forecast for Malaysia remains at 4% to 5%, despite the upside surprise in the second quarter.

“We are aware that a number of agencies are looking toward a better year of growth for Malaysia, which were higher than the government’s forecast. However, we are only six weeks into the second half of the year and we still have some ways to go.

“We will have to wait for the new budget to be announced, before there are any changes to the forecasts,” Mustapa said.

He said the Ministry of International Trade and Industry (MITI) is maintaining its overall trade growth forecast of 5% for the year and that foreign direct investment (FDI) remains strong.

He said FDI remains robust, supported not only by investments from Europe, but also China.

On Friday, Bank Negara Malaysia (BNM) said Malaysia’s economy grew 5.8% year-on-year in the second quarter, supported by domestic demand — mainly due to private sector spending, as well as export growth.

The central bank said it expects the Malaysian economy to expand by more than 4.8% in 2017, underpinned by domestic demand.

Following the announcement of higher-than-expected growth, several agencies, including IHS Markit and Morgan Stanley, have forecasted economic growth of beyond 5% for Malaysia in 2017.