PETALING JAYA: Malaysia’s gross domestic product (GDP) is projected to expand at a marginally lower rate of 4.5% in 2020 compared to 4.6% in 2019, according to RAM Ratings.
The ratings agency pointed out that further easing of monetary policy is on the cards while
fiscal policy remains mildly growth-supportive.
“Against this backdrop, Malaysia will need to harness its inner strength from resilient domestic demand and accommodating policy measures to build a buffer against external challenges, which are likely to impinge on its growth next year,” it said in a press statement for its annual credit summit.
During the summit, the panellists concurred that global uncertainties will persist in the foreseeable future, although there is a silver lining - Malaysia has been performing relatively commendably to date.
Out of the 11 broad sectors under its coverage, RAM has identified the automotive and commercial property to remain on a negative outlook while the others which include power, telecommunications, toll roads and banking, are stable.
It elaborated that the automotive segment is weighed down by keen competition in an increasingly more saturated market while the commercial property industry has been plagued by a glut of retail malls and office space.
Meanwhile, the rating agency said that the credit trends of its rated issuers are generally stable, supported by their strong business profiles and credit metrics.
“The banking sector, a bellwether for the Malaysian economy, is envisaged to shift to a lower gear on account of slower growth.”
“Even so, the incumbents are still well-capitalised while their asset quality remains intact despite some potential slippage.”
On the whole, RAM said that about 93% of its rated entities are on stable outlook and the rating drift is anticipated to improve further next year.
