S&P affirms Malaysia's credit ratings, outlook remains negative
S&P has lowered its 2021 real GDP growth forecast for Malaysia to 4.1 percent from 6.2 percent to incorporate the considerable impact of the tightening of the government's pandemic control measures.
S&P Global Ratings on Tuesday affirmed its "A-" long-term and "A-2" short-term sovereign credit ratings on Malaysia.
The rating agency also affirmed its "A" long-term and "A-1" short-term local currency ratings on Malaysia. The outlook on the long-term ratings remains negative.
S&P said in a statement that the negative outlook reflects its expectation that Malaysia faces heightened risks to its fiscal and economic recovery prospects over the next 12 to 24 months related to the COVID-19 pandemic and domestic political uncertainty.
According to S&P, its affirmed ratings on Malaysia reflect the country's strong external position, monetary policy flexibility, and record of supporting sustainable economic growth. However, the country's elevated government debt and evolving fiscal policy settings temper these strengths.
The rating agency also said that the negative outlook reflects enduring pressures on Malaysia's fiscal and debt settings, which have been further undermined by a worsening domestic COVID-19 situation this year.
Heightened political uncertainty compounds the challenges that the government will face in rapidly consolidating its finances over the next two to three years, it added.
S&P has also lowered its 2021 real GDP growth forecast for Malaysia to 4.1 percent from 6.2 percent to incorporate the considerable impact of the tightening of the government's pandemic control measures.
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