Moody's Ratings: Malaysia set to outperform peers despite global headwinds
Its vice-president and senior credit officer Martin Petch said that while global growth is likely to slow, Malaysia's diversified economy, competitive edge, and policy credibility will help cushion the impact.
"We are in a situation where there is a great deal of uncertainty. The major impact we are seeing is a step down in investment and consumer demand, along with increased volatility in financial markets," he told Bernama in an interview recently.
However, Malaysia stands to benefit from shifts in foreign direct investment as companies adjust to new global trade patterns.
"Potentially, Malaysia is one of the economies that could attract more investment, given its relatively low tariff rates compared to other countries in the region," he said.
Despite high debt levels and a narrow tax base limiting fiscal flexibility, Petch noted that Malaysia's inflation has remained contained, allowing room for monetary easing if necessary.
"Malaysia's inflation performance has been very good. Inflation is back around two per cent, so there is scope for Bank Negara Malaysia to ease policy to support growth," he said.
Petch noted that political stability over the past few years has also strengthened investor confidence, but cautioned that any return to volatility could hurt investment flows and domestic demand.
Commenting on the recent move by the US to impose tariffs on Malaysian solar panels, Petch said the immediate impact is likely to be sector-specific.
"If Malaysia has comparative advantages, there is scope for market switching to mitigate the impact," he said.
Overall, Moody's expects Malaysia's growth to remain relatively strong compared to its peers, although global trade tensions could weigh on the broader outlook.
"Malaysia stands out based on economic strength. The country's diversified economy and resilience will help it navigate the challenges ahead," Petch added.
– BERNAMA
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