MALAYSIA has retained its sovereign credit rating of BBB+ with a Stable outlook from Fitch Ratings, a reaffirmation the Ministry of Finance (MoF) says underscores growing confidence in the country’s governance, economic resilience and reform trajectory.
In its assessment, Fitch credited Malaysia with outperforming the global median across key environmental, social and governance benchmarks, pointing in particular to improvements in political stability, rule of law, institutional quality, corruption control and human rights.
The agency said recent political stability had become “a fulcrum for Malaysia’s improving policy certainty,” supporting medium-term growth and reinforcing fiscal resilience.
Fitch projects Malaysia’s GDP to expand by 4.6 per cent in 2025, near the upper end of the Government’s 4 to 4.8 per cent forecast.
The labour market is expected to remain strong into 2026, with unemployment at its lowest level in more than a decade and wage growth continuing to underpin domestic consumption.
This performance is strengthened by a surge in artificial-intelligence-related capital expenditure and high-impact technological investments, which have risen 13.2 per cent year-on-year in the first nine months of 2025.
Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim welcomed the reaffirmation, noting that “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 Ekonomi Madani framework.”
The MoF, in a release on Tuesday, said the rating agency’s confidence reflects sustained structural reforms, including the Public Finance and Fiscal Responsibility Act 2023, the Government Procurement Act 2025 and the Government Service Efficiency Commitment Act.
These measures, it said, are designed to strengthen transparency, regulatory quality and institutional resilience.
According to Fitch, the Federal Government deficit is expected to narrow to 3.8 per cent of GDP in 2025, down from 5.5 per cent in 2022, driven by stronger Sales and Service Tax (SST) performance and progress in subsidy rationalisation.
The deficit is forecast to decline further to 3.5 per cent in 2026, with the agency stating that the statutory 3 per cent target under the fiscal responsibility framework is achievable by 2028 if revenue broadening and subsidy reforms continue.
The Government said it will intensify efforts to broaden the revenue base and optimise public expenditure, while pressing ahead with subsidy rationalisation to curb leakages and safeguard public resources.
These reforms, it said, are central to supporting the creation of high-skilled, high-income employment, strengthening productivity and positioning Malaysia further up the global value chain. - December 9, 2025
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