How’s the Malaysian economy doing? I would say not too bad but then again I am just a normal Malaysian citizen. To me, as long as the unemployment numbers remain low, then everything else would continue to flow, right? Okay, perhaps it’s better to see what international rating agencies are saying about us? This is one recent article in asia.nikkei.com: S&P keeps Malaysia’s rating at A-, Outlook stable Generally, we are still under the investment grade yeah. Standard & Poor’s is still keeping Malaysia’s sovereign credit rating at investment grade A- with stable outlook. The reasons include a robust economy that mitigates risks from elevated debt burden and evolving fiscal policy. It said that Malaysia will most likely meet its budget deficit target of 2.8% of gross domestic product in 2018. GDP wise, it will grow an average of 5.1% from 2018 to 2021 backed by private consumption, investment, and exports. (Yes, positive rating from S&P)
S&P said, “The stable outlook reflects our expectation that Malaysia’s strong external position, monetary flexibility, and well-established institutions will remain in place following the change in government.” S&P also said that the scrapping of GST will pose a challenge to Malaysia’s fiscal position because GST make up nearly 20% of government revenue and this has helped cut reliance on commodity revenue of the crude and palm oil exporting nation. It said, “The government will replace the GST with the Sales and Services Tax, which is a narrower program that we believe will raise only approximately half of GST revenue.” S&P further shared that in the near-term, due to the higher petroleum revenue, contribution from SST as well as aggressive expenditure cuts, it should cushion the abolishment of the GST.
S&P also gave this very important statement, “We may raise the ratings over the next 24 months if the strong economic performance observed over the last few years continues and in turn produces a fiscal performance that’s better than we expected, reducing debt levels further than anticipated.” Besides S&P, two other international rating agency, Fitch Ratings also affirmed Malaysia’s A- ratings with stable outlook in May, while Moody’s currently rates Malaysia at A3 with a stable outlook. All these ratings are investment-grade. Do refer to the article in asia.nikkei.com for reference. Is everyone now fully convinced? Haha. It’s okay, at least please feel assured that the Malaysian economy is really as per what was mentioned by our Finance Minister Lim Guan Eng yeah. “Economy remains strong, fundamentals solid, says Guan Eng.” Happy investing yeah. Remember it’s for the long term.
written on 3 Aug 2018
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