Fitch affirms Malaysia’s BBB+ rating, citing strong ESG indicators, political stability, and fiscal reforms under the MADANI Economy framework.
KUALA LUMPUR: Fitch Ratings’ affirmation of Malaysia’s sovereign credit rating at BBB+ with a stable outlook is bolstered by the country’s strong performance across key environmental, social, and governance indicators.
Prime Minister Datuk Seri Anwar Ibrahim said Malaysia scores above the global median in ESG indicators, particularly in political stability, rule of law, and control of corruption.
Fitch highlighted that political stability has been a fulcrum for improving policy certainty, creating a virtuous cycle for medium-term growth and fiscal resilience.
“Malaysia successfully navigated the tariff uncertainties that defined much of 2025,” Anwar said in a statement.
The agency projects gross domestic product growth of 4.6% in 2025, near the upper bound of the government’s official forecast range.
Labour market conditions are expected to remain buoyant through 2026, with unemployment at an 11-year low.
This momentum is further supported by a strong pipeline of artificial intelligence-related capital expenditure and high-impact technology investments.
Anwar said the government has carried out economic reforms to strengthen fiscal and governance frameworks.
These include the Public Finance and Fiscal Responsibility Act 2023 and the Government Procurement Act 2025.
He added that Fitch recognises the federal government deficit is projected to narrow to 3.8% of GDP in 2025.
This is down from 5.5% in 2022 due to stronger tax collection and subsidy reforms.
The deficit is expected to further narrow to 3.5% in 2026.
Fitch noted the 3% of GDP deficit target under the PFFRA is achievable by 2028 if reforms are sustained.
Anwar said the government will further enhance fiscal management through revenue broadening and expenditure optimisation.
“The government will also continue to pursue subsidy rationalisation to curb leakages,” he added.
These savings are instrumental in supporting high-skilled job creation and moving the nation up the global value chain.
