Source: The Sun Daily
Malaysia's long-term economic prospects remain favourable given its
structural strengths and diversified economy despite the revision of its
'A3' rating outlook to 'stable' from 'positive', said Moody's Investors
In a note yesterday, Moody's said the favourable prospects were
because of Malaysia's well-developed infrastructure, substantial natural
resources, globally competitive services sector and manufacturing base
that would likely benefit from the country's improving trade linkages.
"The change in outlook reflects the deterioration in Malaysia's
growth and external credit metrics due to external pressures over the
past year, such as lower commodity prices," it said.
Moody's said the lower commodity prices had reduced government
revenue, while undermining the country's external position, with large
capital outflows, a falling current account surplus, sharp exchange rate
depreciation and falling reserves.
"Like Oman and Peru, Malaysia benefited from the global commodities
boom over the last decade, with palm oil, liquefied natural gas,
petroleum and associated products of particular importance.
"However, because of its relative diversification, Malaysia's economy
appears to be much more resistant to the commodities' downcycle when
compared with its peers," it said.
On the oil and gas industry, Malaysia has sought to diversify its
sources of growth away from upstream sector towards downstream
activities, including refining and petrochemical processing, both of
which somewhat benefitted from lower oil prices.
"While Malaysia continues to work towards improving its external
linkages, its economy has rebalanced towards domestic demand to drive
"This is mirrored in the decline in trade openness, as measured by
the sum of both the exports and imports of goods and services as a share
of GDP. This ratio has fallen gradually, registering 134.4% in 2015
from a recent high of 188.9% in 2005," it added.