Malaysia's Economy To Grow Higher Than A-Rated Countries - Moody's

KUALA LUMPUR, April 26 (Bernama) -- Moody’s Investors Service expects Malaysia’s economy to grow higher than other A-rated countries from 2017 to 2020 against the backdrop of improved external demand. Vice-President and Senior Credit Officer, Christian de Guzman, said Malaysia’s gross domestic product was expected to register an average robust growth of 4.3 per cent in 2017 and 2018. He said the macroeconomic picture had also stabilised in view of the pick up in commodities prices. “There is increased fiscal space to support spending for the economy, with expectation of narrower deficit than last year, provided by the higher oil prices which have so far maintained at US$50 per barrel this year,” Guzman said in a media briefing Wednesday. The government, he said, had also demonstrated its commitment to fiscal consolidation even if more significant reforms were needed to achieve a balanced budget in 2020. However, he said the downside risks exist with external vulnerabilities remaining heightened on account of poor reserve adequacy, structurally lower current account surplus and exposure to capital flows. The structurally weak current account, he explained, provided a smaller buffer to capital outflow in the bond and capital market which had raised concerns among market participants. “However, the capital outflow does not pose a risk to the government’s liquidity as this is mitigated by local debt capital and availability of pool of savings, as well as large institutional investors,” he said. The stable employment, Guzman said, had also ensured continued contribution to funds and liquidity. He also pointed that the capital outflow had also put pressure on the ringgit and inflation which has remained elevated. “We do not see interest rates coming down and rate would be stabilised to address inflation concerns,” he added. -- BERNAMA