Fitch Ratings (Fitch) has reaffirmed Malaysia sovereign credit rating at BBB+, with “Stable” outlook. Key rating drivers which support the reaffirmation are namely broad-based and strong growth momentum; strengthened political stability; continuous current account surplus with strong foreign direct investments; and narrowing fiscal deficit.
“This affirmation is a recognition of Malaysia’s economic progress as envisioned under the Ekonomi MADANI framework, particularly the commitment of the MADANI Government to implement significant legislative and institutional reforms that has resulted in better policy clarity and effective economic management,” said YAB Dato’ Seri Anwar bin Ibrahim, Prime Minister and Minister of Finance.
Fitch acknowleged that policy certainty has improved in the country as a result of a more stable Government and demonstrated by the introduction of various economic reforms, including strengthening state owned enterprise governance and legislation, including the Public Finance and Fiscal Responsibility Act 2023. This is in line with the International Monetary Fund’s views on the Government’s timely reform agenda in enhancing productivity and inclusive growth.
The Malaysian economy expanded strongly by 5.3% in the third quarter of 2024 underpinned by resilient domestic demand and improving external sector performance. The Government is confident to achieve robust growth in 2024, which was revised upwards to between 4.8% and 5.3%, from the initial estimate of between 4% and 5%. The Government is commited to fiscal consolidation, gradually reducing the fiscal deficit, estimated at 4.3% of GDP in 2024 to 3.8% in 2025.
Budget 2025 was formulated to support the momentum of economic growth, projecting between 4.5% – 5.5% growth in 2025. Under Budget 2025, the Government will continue to enhance fiscal management through broadening of revenue measures, optimal use of resources and continue to pursue subsidy rationalisation, particularly RON95.
Institutional and structural reforms will also be prioritised in line with the Ekonomi MADANI framework, to transform the economy, move up the value chain, promote high-skilled and high-income job creation, as well as enhance national productivity and competitiveness.