Moody's: Malaysia's credit profile supported by economic strength, growth prospects

Moody's said on Friday the Malaysian economy boasts solid medium-term growth prospects and high levels of competitiveness.

KUALA LUMPUR: The credit profile of Malaysia (issuer rating A3) is supported by the countryʼs "a1" economic strength, which reflects a large and diverse economy, Moody's Investors Service says.

It said on Friday the Malaysian economy boasts solid medium-term growth prospects and high levels of competitiveness.

“Its 'a2' institutions and governance strength, which balances solid executive and legislative institutions and a track record of effective macroeconomic policymaking against perceived weakness in the control of corruption and governance that will take time to address, as well as the slow pace of revenue-enhancing fiscal reforms that constrains fiscal policy credibility and effectiveness, ” it said.

Moody's said the governmentʼs "baa3" fiscal strength takes into consideration its moderately high debt burden and narrow revenue base that is partly reliant on petroleum and non-tax revenues, although the debt is predominantly denominated in local currency and the large domestic savings pool anchors funding costs and debt affordability.

“Its 'baa' susceptibility to event risks driven by external vulnerability, on account of the economyʼs exposure to volatile capital flows and sizeable short-term external debt liabilities, ” it said.

Moody's issued the statement after reviewing all of its ratings periodically in accordance with regulations – either annually or, in the case of governments and certain EU-based supranational organisations, semi-annually.

It said the review did not involve a rating committee, and the statement does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future.

On Thursday, the World Bank said Malaysia’s economy is expected to grow by 6.7% in 2021, on the back of successful containment of Covid-19 infections and effective rollout and distribution of the vaccine.

The latest edition of the World Bank Malaysia economic monitor: Sowing the seeds, said quicker containment of the third wave of Covid-19 infections and vaccine distribution could lead to a faster-than-expected recovery in consumer demand, greater investor confidence and consequently a robust recovery in domestic economic activity in 2021.

“Signs of recovery are showing with Malaysia posting a smaller contraction of 2.7% in the third quarter of 2020, compared with 17.1% in the second quarter of 2020, ” it said.

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights

Next In Business News

Tasco posts record quarterly revenue
Sime Darby Property buys MVV land from sister company Sime Darby
Samchem registers higher Q3 profit despite Covid-19 challenges�
Bursa Malaysia ends lower for fourth session in a row
Maybank extends RM20bil worth of repayment assistance
Nikkei erases early losses to end flat amid strong earnings
Glomac: Prospects intact, RM8bil GDV within Klang Valley
Oil falls after increases in U.S. crude, fuel stockpiles
Australian border openings boost demand for flights
Asian currencies fall on U.S. rate expectations, China jitters

Others Also Read