Economy Recovery Plans Unaffected By Fitch Downgrade

When Fitch Ratings’ downgraded Malaysia’s credit rating from A- to BBB+ there were concerns if this will impact Malaysia as she was just about to pick after a detrimental shutdown due to Covid-19. However as some analyst took note, the report caused minimal to the stock market nor the ringgit, in fact both are doing fairly well as we close 2020.

“The Budget 2021 initiatives will continue the recovery momentum and are expected to contribute to the gross domestic product (GDP) growth target of between 6.5 per cent to 7.5 per cent next year said Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz

“Many have often said this projection is too optimistic. However, Fitch itself has projected the local economy to grow 6.7 per cent, in line with Malaysia’s own projection.

He went on to add that other institutions such as the IMF (International Monetary Fund) have even forecast a growth of up to 7.8 per cent, which is higher than the government’s projection. This shows confidence in the capabilities of the Malaysian economy to bounce back.

Its fairly noted that the FBM KLCI and the ringgit remained stable and we recorded a high demand (Bid to Cover Ratio) which was 2.6 times more than the value of the offer for the 10-year MGII bonds (Malaysian Government Investment Issues) issued last week.

Despite the outlook by Fitch, Malaysia has attracted eight venture capital fund managers from the United States, South Korea, China, Indonesia and Singapore who have agreed to invest in Malaysian start-up companies with an investment value of up to RM1.57 billion. A boost to the country’s trust and confidence showing that our long-term capital market is still strong.

Accordingly the government is committed to implementing fiscal consolidation and sustainability measures based on the Medium-Term Fiscal Framework, as well as the enactment of a Fiscal Responsibility Act which aims to improve fiscal management and reporting, thus further improving transparency and good governance.

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