KUALA LUMPUR, Feb 20 — Malaysia’s robust gross domestic product (GDP) growth performance in 2017 will likely continue in 2018 and over the medium-term, supporting the sovereign’s credit profile, says Moody’s Investors Service (Moody’s).
In a statement today, the rating agency said Malaysia’s (A3 stable) credit profile was supported by its large and diversified economy, ample natural resources and robust medium-term growth prospects.
It said GDP growth should average about 5.2 per cent in 2018, underpinned by a pipeline of large infrastructure projects that would stimulate public and private investments.
However, Moody’s noted that the country’s elevated system-wide leverage, including in the household sector, posed credit challenges.
“Although the fiscal deficit reduction trend has been maintained, the implementation of further fiscal consolidation remains a major credit challenge.
“That said, a favourable debt structure and large domestic savings would help to mitigate risks arising from a high government debt,” it said, adding that despite the current account surpluses, Malaysia would continue to be exposed to potential volatility in capital inflows partly due to active foreign investor presence.
“Foreign reserve adequacy remains low when compared with A-rated peers,” it added. — Bernama