Moody’s Ratings this week reaffirmed Malaysia’s long-term foreign and local currency issuer ratings at A3 with a Stable Outlook, citing the country’s resilient economy, strong medium-term growth prospects and ongoing fiscal reform efforts.
The global ratings agency expects Malaysia’s economy to grow faster than similarly rated sovereigns in 2026, supported by its diversified and competitive economic structure, abundant natural resources and large domestic savings base.
According to Moody’s, these strengths, together with Malaysia’s sizeable domestic investor base, continue to support the government’s financing needs, reduce liquidity risks and help maintain moderate borrowing costs.
Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim said the affirmation reflects Malaysia’s economic resilience and the progress achieved in strengthening fiscal discipline, improving governance and broadening the country’s revenue base.
“The reform agenda has not been easy, and there is still a long journey ahead before its full benefits can be realised. This assessment should not make us complacent. Instead, it should strengthen our resolve to intensify reform efforts to ensure that prudent economic management translates into higher incomes, broader opportunities and tangible improvements in the well-being of the people,” he said.
Anwar added that Malaysia must continue preserving domestic stability, policy certainty and reform momentum amid ongoing geopolitical tensions and global market uncertainties.
The government, he said, remains focused on protecting the economy while strengthening the foundations for sustainable long-term growth.
Malaysia’s economy expanded 5.4% year-on-year in the first quarter of 2026, following growth of 5.2% in 2025.
Moody’s attributed the stronger performance to robust domestic demand, particularly private consumption and investment, alongside firmer exports of electronic products.
Despite challenges arising from geopolitical tensions in the Middle East, volatile global energy prices and softer external demand, the ratings agency expects Malaysia to continue outperforming many sovereign peers with similar credit ratings.
Moody’s also acknowledged that revenue reforms introduced since 2023 have successfully broadened the government’s tax base, supporting gradual fiscal consolidation efforts.
The agency noted that these reforms have helped strengthen public finances despite higher subsidy expenditures stemming from elevated global energy prices and increased development spending under the upcoming 13th Malaysia Plan (13MP).
In addition, Moody’s highlighted Malaysia’s strong executive and legislative institutions, effective macroeconomic policymaking track record, favourable domestic financing conditions and overall macroeconomic stability as key credit strengths.
The agency said the Stable Outlook reflects balanced risks to Malaysia’s credit profile.
A stronger economic performance and faster fiscal consolidation could further boost government revenue generation, reduce debt levels and improve debt affordability over time.
The government noted that a range of economic indicators point to strengthening economic fundamentals.
Malaysia’s unemployment rate fell to 2.9% in the first quarter of 2026, the lowest level in more than a decade, while total employment rose to 16.7 million people. A total of 48,500 new jobs were created during the quarter.
Malaysia also climbed eight places to 15th position out of 70 economies in the 2026 IMD World Competitiveness Ranking, marking its highest ranking since 2020.
The country retained its fourth-place global ranking for Economic Performance while recording improvements in Government Efficiency, Business Efficiency and Infrastructure.
Meanwhile, the ringgit strengthened 10.1% against the US dollar in 2025, making it the best-performing currency in Asia during the year.
The Government reiterated its commitment to fiscal objectives outlined under the Public Finance and Fiscal Responsibility Act 2023 (Act 850).
The administration said it will continue efforts to broaden revenue sources, improve spending efficiency, strengthen fiscal transparency and enhance subsidy targeting while safeguarding the welfare of Malaysians.
