In a report released today, the global rating agency said Malaysia, rated A3 with a stable outlook, is among several large emerging market economies demonstrating solid resilience across key market indicators.
“Malaysia, India, Thailand, Indonesia and Mexico have consistently shown market resilience,” it said, adding that increases in credit spreads were limited and short-lived, yield differentials between emerging markets and the United States (US) remained moderate, and exchange rate movements were contained.
It said that while market volatility rose during periods of stress, it remained controlled and lower than in weaker economies, indicating that adjustments were driven mainly by typical interest rate and currency movements rather than deeper financial stress.
“Market access was preserved throughout, and stress was absorbed without prolonged disruption across market channels. Overall, these countries showed durable resilience across market indicators, with shocks absorbed through price adjustments rather than financing constraints,” it said.
The report also highlighted that Malaysia’s performance was underpinned by improved investor confidence, supported by policy adjustments and government spending measures during periods of stress.
However, it noted that resilience remains uneven, with countries such as Turkey, Argentina and Nigeria continuing to face persistent market stress due to policy inconsistency and structural constraints.
Moody’s added that while Malaysia had demonstrated strong resilience to recent shocks, its longer-term resilience – like that of Brazil and South Africa – depends on specific conditions.
“In Brazil, decisive monetary tightening restored inflation control and supported confidence, but high interest costs and fiscal pressures limit its ability to absorb future shocks, with the durability of market stability depending on progress in reducing deficits and debt-servicing costs.
“South Africa’s case is different but also conditional, as a freely floating exchange rate helps preserve reserves and enables market adjustment, but leads to larger currency swings during global stress, while weak growth and high debt constrain fiscal flexibility, allowing volatility to persist even with sound policies,” it said.
According to Moody’s, Malaysia sits between these two cases.
“While recent fiscal reforms signal progress and could strengthen buffers over time, fiscal space remains limited amid a volatile and narrow revenue base.
“Future resilience depends in part on the successful implementation of further fiscal reforms in the face of ongoing political and social pressures,” it added.