Fitch Ratings affirms Malaysia's rating at ‘BBB+’, maintaining stable outlook
Date
12/17/2024 7:38:37 AM
(MENAFN) Fitch Ratings has affirmed Malaysia's long-term foreign-currency issuer default rating (IDR) at "BBB+" with a stable outlook, highlighting the country's strong economic fundamentals and growth prospects. In a statement released on Monday, Fitch cited Malaysia’s robust medium-term growth driven by solid domestic and foreign investments, as well as persistent current account surpluses supported by a diversified export base. These strengths, however, are tempered by challenges such as high public debt, a low revenue base relative to current expenditure, and weaker external liquidity compared to its peers.
Fitch forecasts Malaysia's economy to grow by 5.2 percent in 2024, with a gradual slowdown to 4.5 percent in 2025 and 4.3 percent in 2026. Despite the expected deceleration, steady labor market conditions and an income boost from pay hikes for civil servants in late 2024 and early 2026 should help support household spending. Additionally, investments from government-linked companies and foreign capital inflows tied to supply-chain diversification are expected to further underpin growth.
However, Fitch also warned that Malaysia's export performance, which has benefited from the global technology upcycle in 2024, is likely to lose momentum in 2025 due to weaker external demand. Growth prospects are further at risk from potential geopolitical tensions that could affect global trade. Despite these challenges, the country’s fiscal outlook remains stable, with federal government revenue as a percentage of GDP expected to hold steady at around 16.5 percent in 2025, the same as the estimated figure for 2024.
Overall, Fitch's stable outlook for Malaysia reflects confidence in the country's growth trajectory and its ability to manage economic challenges, although it cautions that external factors and domestic fiscal issues could affect the nation's longer-term performance.
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