KUALA LUMPUR, Oct 10 — Malaysia’s resilient domestic demand and a larger development expenditure outlined in the second phase of the 12th Malaysia Plan “will underpin robust medium-term growth of between 4 and 5 per cent,” according to Fitch Ratings.
It said the immediate risks to the stability of Malaysia’s coalition government have eased in the wake of local elections in six states as the ruling Pakatan Harapan (PH) and Barisan Nasional (BN) bloc and the opposition Perikatan Nasional bloc each retained three states.
“We believe this outcome will be sufficient to ensure the continuity of the coalition in the near term, but BN’s losses may aggravate underlying tensions between the coalition partners over the longer term,” it said in its Asia-Pacific Sovereigns Peer Review updates.
The rating agency rated Malaysia BBB+ with a stable outlook.
On the upcoming Budget 2024 on Oct 13, Fitch said it sees subsidy rationalisation measures, although broad and abrupt removal of subsidies is unlikely.
“The election outcome could encourage the government to provide more social assistance.
“Budget 2024 will likely also introduce guidelines for progressive private sector wage setting, albeit only on a voluntary and productivity-linked basis”, the credit rating agency said.
— Bernama
