Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim
KUALA LUMPUR: Fitch Ratings’ affirmation of Malaysia’s sovereign credit ratings at BBB+ with a ‘stable’ outlook is bolstered by the country’s sterling performance across key environmental, social, and governance (ESG) indicators.
Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim said Malaysia scores above the global median in the ESG indicators, particularly in political stability, rule of law, institutional quality, control of corruption, and human rights and political freedoms.
Fitch highlighted that political stability has been a fulcrum for Malaysia’s improving policy certainty, creating a virtuous cycle that propels the nation’s medium-term growth prospects and reinforces fiscal resilience.
"Malaysia successfully navigated the tariff uncertainties that defined much of 2025, culminating in a mutually beneficial agreement that supports exports and strengthens our economic position.
"While global conditions remain challenging, the government will stay the course on the reforms outlined under the MADANI Economy framework,” he said in a statement today.
The agency projects gross domestic product (GDP) growth of 4.6 per cent in 2025, near the upper bound of the government’s 4-4.8 per cent official forecast range.
Labour market conditions are expected to remain buoyant through 2026, with unemployment at an 11-year low and rising wages continuing to support household spending.
This momentum is further supported by a strong pipeline of artificial intelligence (AI)-related capital expenditure and high-impact technology investments, which rose by 13.2 per cent year-on-year in the first nine months of 2025.
Anwar said the MADANI government has carried out a series of economic reforms to strengthen Malaysia’s fiscal and governance frameworks, including the Public Finance and Fiscal Responsibility Act 2023 (PFFRA) and the implementation of the Government Procurement Act 2025.
"These accountability-enhancing measures, along with the Government Service Efficiency Commitment Act, are expected to strengthen regulatory quality and ensure that national prosperity is built on a resilient institutional foundation,” he said.
He added that Fitch recognises that the federal government deficit is projected to narrow to 3.8 per cent of GDP in 2025, down from 5.5 per cent in 2022 due to stronger Sales and Service Tax (SST) collection and subsidy reforms, and is expected to further narrow to 3.5 per cent in 2026.
Fitch also noted that the three per cent of GDP deficit target, as stipulated under the PFFRA, is achievable by 2028 if subsidy rationalisation and modest revenue base broadening are sustained.
Anwar said the MADANI government will further enhance fiscal management through revenue broadening measures and expenditure optimisation.
"The government will also continue to pursue subsidy rationalisation to curb leakages and ensure optimal resource usage.
"These savings are instrumental in supporting high-skilled and high-income job creation, moving the nation up the global value chain and enhancing overall national productivity to remain resilient in storming global uncertainty to come,” he added. - Bernama
