KUALA LUMPUR: Moody’s Investors Service Inc in its latest in-depth report noted that the country’s A3 credit rating is backed by its large and diversified economy, sufficient natural resources and healthy medium-term growth. Since 2010, Malaysia’s well-developed infrastructure, competitive manufacturing and service sectors, and substantial natural resources have helped the country to record an average annual growth of 5.5%, making it one of the fastest-growing A-rated sovereigns,” the international rating agency noted yesterday. The large infrastructure projects in the pipeline would help spur public and private investments, the report added.
The boom in electronics- and commodity-related exports has resulted in a staggering growth in exports a jump of 18.9% year-on-year (YoY) posted in 2017 from 1.2% YoY in 2016. Moody’s cautioned household debt would remain a challenge to economic growth and macro-stability despite posting a moderate trend. Although trends in household debt have moderated as a share of the GDP, the challenges are affecting the macro-stability. However, the debt showed a declining rate, mainly due to macro-prudential measures introduced by Bank Negara Malaysia (BNM) since 2010 to tighten household lending. This has led to a lessening growth in riskier household loans, including personal unsecured financing, credit-card debt and motor vehicle loans,” it said. At the end of the fourth quarter of 2017 (4Q17), the outstanding household debt stood at 84.3% of GDP compared to 88.4% at the end of 2016. However, it is still comparatively higher to Malaysia’s income levels. According to the Malaysia Productivity Corp, the country’s labour productivity evaluates higher than others in Asian economies, including China, Indonesia, the Philippines and Thailand, but is below that enjoyed by developed economies. In the 11th Malaysia Plan, the government targets a 3.7% increase in labour productivity per annum by 2020 in order to achieve a 5%-6% growth in GDP. In 2016, Malaysia’s labour productivity grew 3.5%, helped by government’s continuous efforts in putting forward digitalisation and improving accountability at the industry level.
