S&P Global Ratings (S&P) and Fitch Ratings (Fitch) have affirmed Malaysia’s sovereign credit ratings at A- and BBB+ respectively, with a stable outlook. The affirmation by both agencies reflects ongoing confidence among international stakeholders in Malaysia’s robust and resilient growth performance, despite challenging external demand and increased global geopolitical tensions.
According to S&P, “Our rating on Malaysia is supported by its strong external position and robust monetary policy framework. Additionally, the country’s economic growth momentum shows improvement at a higher rate compared to its peers.”
S&P highlighted Malaysia’s poised position to benefit significantly from the global semiconductor industry boom driven by artificial intelligence (AI) computing. Sustaining economic growth and the implementation of bulk subsidy reforms are crucial factors in bolstering the nation’s public finances. Furthermore, recent political stability has facilitated policy formulation aimed at economic reform and fiscal consolidation.
Fitch projects Malaysia’s Gross Domestic Product (GDP) to surge by 4.4% in 2024 and 4.5% in 2025, up from 3.6% in 2023. This trend is underpinned by resilient domestic demand and investments in the manufacturing sector. Additionally, it anticipates domestic spending to benefit from a buoyant labour market, cash aid programmes, and pension fund withdrawals. Fitch also forecasts manufacturing output and exports to expand with the recovery in external demand for electronics.
Fitch also predicts Malaysia’s current account surplus to widen to 2.1% and 2.4% of GDP, respectively, in 2024 and 2025. Malaysia is seen to benefit from global supply chain diversification and increased foreign investment realised in 2024.
“The maintenance of Malaysia’s sovereign credit rating and positive economic outlook by S&P and Fitch are testament to the Government’s prudent economic management and the progress of the MADANI Economic Reform agenda,” said Dato’ Seri Anwar Ibrahim, Prime Minister and Finance Minister.
These efforts encompass comprehensive institutional reforms to enhance business facilitation, competitiveness, and the continuation of projects under the New Industrial Masterplan 2030 (NIMP 2030), the National Energy Transition Roadmap (NETR), and the Mid-Term Review of the Twelfth Malaysia Plan.
“With a favourable labour market and encouraging growth in trade and investment driving first-quarter GDP growth in 2024 beyond expectations, the Government is confident in the country’s ability to achieve growth within the targeted range of 4% to 5% in 2024,” added Anwar.
Looking ahead, the Government remains committed to ensuring fiscal sustainability by adhering to a consistent fiscal consolidation trajectory. The fiscal deficit, which narrowed to 5% in 2023, is expected to be further reduced to 4.3% in 2024. In the medium term, the Government targets a fiscal deficit of 3%, as stipulated in the Public Finance Act and Fiscal Responsibility 2023 framework, effective January 1, 2024. This aligns with fiscal targets under the MADANI Economic framework to achieve fiscal sustainability and good governance.
