Moody's Expects 4.4 Per Cent GDP Growth For Malaysia This Year

KUALA LUMPUR, March 23 (Bernama) -- Moody's Investors Service expects Malaysia's Gross Domestic Product (GDP) to record 4.4 per cent growth this year, which is near the high side of the government's forecast of between 4.0 to 4.5 per cent. Its Vice President-Senior Analyst Sovereign Risk Group, Christian de Guzman, said Moody's projection was based on the country's outlook on exports, investments and consumption that is in line with weaker consumer sentiment for this year. "Malaysia's sovereign rating outlook remains stable on the back of a fiscal consolidation trend that remains intact. "The policy response has evolved and the reserves have stabilised in recent months because the central bank has tolerated greater exchange rate flexibility, but the current account balance, while still in surplus, represents a narrower buffer against capital flows," he told a media briefing on Moody's just-released edition of Inside ASEAN. The edition also examines the implementation of major policy reforms in Malaysia, which have mitigated the negative impact of lower oil prices on the government's fiscal position. Moody's noted that external pressures including increased capital flow volatility and consequent exchange rate depreciation have led to a deterioration in Malaysia's growth and external metrics thereby supporting its earlier decision to revise the sovereign rating outlook to stable from positive. On crude oil, the international rating company is still assuming a lower price regime at an average of US$33 per barrel for this year on oversupply reason, and as shale oil production may act as a ceiling for an oil price increase. "Liquidity remains strong for national oil company Petronas as it has benefited from the government's high degree of financial flexibility and ability to reduce dividends," he said. For the Malaysian ringgit, de Guzman said he is still holding on to an average rate of 4.20 against a US dollar for this year as a revision would be too early, while on 1Malaysia Development Bhd, he said it no longer possess contingency or systematic risks, due to the company's recent progress in selling and developing its assets. Moody's said there is a potential for higher non-performing loans of between one to two per cent for banks this year, as property price correction could pose an asset quality risk. --BERNAMA