KUALA LUMPUR: Fitch Ratings is maintaining its Negative Outlook on Malaysia’s sovereign ratings.
In its 2015 Outlook for Emerging Asian Sovereigns report on Monday, said it said eight of 10 Emerging Asian sovereigns were on Stable Outlook, with two (Malaysia and Mongolia) on Negative Outlook.
Fitch said this was in the context of relatively weak credit fundamentals for an ‘A’ range sovereign.
“Fitch acknowledges that the government has so far stuck to a path of consolidation for the headline federal deficit set out in July 2013, although the drop in oil prices could delay or derail fiscal consolidation, if sustained.
It added the emergence of “twin” public and external deficits could affect investor confidence, if it were to occur.
A deeper dive into credit profiles using Fitch Ratings’ four main categories for analysis reveals marginally more negative than positive momentum.
Fitch said it was striking that the Emerging Asian markets should have been caught up in turbulence coming from Russia, as the region's direct links with Russia are few.
Fitch said it expects real GDP in Emerging Asia, excluding China, to expand by about 6% in 2015 and 2016, remaining the world's fastest-growing region.