Moody’s A3 credit rating shows economy is sound, says Guan Eng

Finance Minister Lim Guan Eng says the removal of the goods and services tax (GST) is among the factors that has checked rising prices.

PETALING JAYA: Finance Minister Lim Guan Eng has welcomed credit rating agency Moody’s reaffirmation of the country’s A3 credit rating, saying it proves the economy has “solid fundamentals”.

He also said it showed that the agency was convinced about Putrajaya’s commitment to implementing institutional reforms.

The Moody’s report attributed the retaining of the A3 rating with a stable outlook to the nation’s competitive economy, effective institutions and solid medium-term growth prospects.

“This compares favourably against some countries that have had their sovereign credit rating downgraded recently.

“Malaysia’s economic strength scores well against the median of its A-rated peers, especially in terms of average GDP growth,” he said in a statement today.

Lim said new economic data also indicated that the nation’s economy would grow at a greater rate in the coming months, projecting it to expand at a rate of 4.8% in 2020.

He said inflation rates remained “low and stable” at 1.0% for December 2019, highlighting that Malaysia’s inflation rate of 0.7% for 2019 was one of the lowest in the region.

He pointed out that the Purchasing Managers’ Index was at a 15-month high while the Statistics Department’s Leading Economic Indicator for October 2019 increased by 1.4% to 120.3 points.

“Clearly the removal of the goods and services tax (GST) and the fixing of RON95 petrol price cap at RM2.08 per litre has checked price rises compared with the previous government’s imposition of GST which pushed inflation to as high as nearly 5%.”

He added that the economy’s prospects were set to improve further following a trade truce signed between China and the United States.