Moody's Cuts Malaysia's Sovereign Rating Outlook Due to Growth Risks

Malaysia has complained to Turkey for deporting several suspected militants to Kuala Lumpur without warning, a security official said on Tuesday (08/08), as police step up checks ahead of the Southeast Asian Games that start in the capital this month. (Reuters Photo/Basuki Muhammad)

By : Praveen Menon | on 7:45 PM January 11, 2016
Category : International, SE Asia, Business

Kuala Lumpur. Moody's cut Malaysia's sovereign rating outlook to stable from positive on Monday due to the negative impact of changes in the external environment on the Southeast Asian economy's growth.

The ratings agency said the change in outlook reflects a deterioration in Malaysia's growth and external credit metrics due to external pressures over the past year.

It affirmed Malaysia's issuer and senior unsecured bond ratings at A3.

Moody's said the changes in the external environment have reduced government revenues over the period.

"Those environmental changes have also undermined Malaysia's external position, with large capital outflows, a falling current account surplus, sharp exchange rate depreciation and falling reserves," the ratings house said in a report.

Alongside a worsening external environment, material domestic imbalances continue to pose a risk to growth and household debt levels remain high, it added.

Despite progress in relation to fiscal consolidation, Moody's expects Malaysia's public debt burden and debt affordability will see only limited improvement.

On Monday, Malaysia's November industrial production slowed to its weakest pace in 16 months, hurt by weaker global demand and a decline in mining production.

Reuters

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