KUALA LUMPUR – Fitch Ratings’ “BBB+” affirmation on Malaysia’s sovereign credit rating with a stable outlook for 2023 reflects its confidence in the current government’s administration, said Prime Minister Datuk Seri Anwar Ibrahim.
In a statement today, Anwar said the affirmation also showed the international rating agency’s confidence in the strength of Malaysia’s economic recovery as well as the country’s resilience amidst an uncertain and highly challenging global landscape.
“Malaysia’s ratings balance a diversified economy with strong medium-term growth prospects against high public debt, a low revenue base relative to the operating expenditures,” said Anwar, citing Fitch’s statement released yesterday.
According to Fitch, Malaysia’s gross domestic product (GDP) is expected to moderate to 4% in 2023 and 4.8% in 2024, from 8.7% in 2022 amid the easing of Covid-19 restrictions and the government’s continuous efforts to support the economy’s rapid and broad recovery.
Fitch also expects the services sector to continue to be boosted by resilient domestic demand, contained inflation and the recovery in tourism-related sectors from the reopening of China.
“The medium-term growth trend is expected to remain robust between 4% and 5%,” it said, anticipating that manufacturing and exports are likely to face headwinds from weaker global demand for electronics and commodities.
Meanwhile, Fitch assumes deficit reductions will be gradual and expects fiscal deficit to decline to an average of around 4.5% of GDP from 2023 to 2025, citing upside risks including greater expenditure rationalisation and substantial revenue mobilisation measures.
Moving forward, Anwar said the government is determined to ensure that the nation’s fiscal position continues to strengthen through gradual deficit consolidation, while balancing the need to support economic growth during these challenging times globally.
“Through Budget 2023, which will be tabled on February 24, 2023, the government will continue to intensify reform efforts to drive the country’s economic recovery, boost investment and improve public infrastructure.
“Continued emphasis will also be placed on initiatives to control inflationary pressures and ease the people’s burden from the high cost of living,” he said.
In addition, Anwar said Budget 2023 will focus on strengthening the country’s finances and governance, to support the government’s commitment to sustain the economic recovery momentum towards improving the people’s well-being, in line with the budget’s theme of “Building Malaysia Madani.” – Bernama, February 16, 2023
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