Malaysia’s economy to worsen on muted private consumption — Fitch

Fitch Ratings previously downgraded Malaysia’s credit rating from 'A-' to 'BBB+', making it more expensive for the country to borrow. (Photo by Shahrin Yahya/The Edge)

Fitch Ratings previously downgraded Malaysia’s credit rating from 'A-' to 'BBB+', making it more expensive for the country to borrow. (Photo by Shahrin Yahya/The Edge)

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KUALA LUMPUR (Feb 1): Malaysia’s economic outlook is set to worsen this year with gross domestic product (GDP) growth in 2021 dipping to 10%, down from 11.5% projected earlier.

Fitch Solutions, the research arm of Fitch Group, cited “muted private consumption”.

“Employment and wages are likely to once again come under intense pressure, this time with even less scope for fiscal support, given that government finances are already strained and close to the raised debt limit of 60% of GDP,” it said.

It added that a decline in GDP growth will further negatively impact the number of available funds needed to strengthen Malaysia’s healthcare system.

The research outfit highlighted that Prime Minister Tan Sri Muhyiddin Yassin already warned on Jan 11 that the country’s healthcare system was at a breaking point.

It said since then, the number of active Covid-19 cases had risen from 28,554 to 48,150 as of yesterday (Jan 31).

Fitch Solutions said the surge in Covid-19 cases will paralyse Malaysia’s healthcare system.

It added that Malaysia had since started integrating its public and private healthcare systems to cope with the pressure.

Fitch Solutions, along with Fitch Ratings, are part of Fitch Group.

However, Fitch Solutions’ research does not affect Fitch Ratings' assessment of the country’s credit ratings.

In December last year, Fitch Ratings downgraded Malaysia’s credit rating from "A-" to "BBB+", making it more expensive for the country to borrow.