KUALA LUMPUR (Jan 30): Standard & Poor’s Ratings Services has lowered its growth forecasts for Malaysia’s gross domestic product (GDP) to 4.6% this year and 5% in 2016, as oil prices continue to tumble.

In a statement today, the credit risk research firm said its previous forecast was 5.5% for 2015 and 5.4% for 2016.

"The steep drop in global oil prices, which we now expect to last at least through 2016, will likely hurt Malaysia's exports, reduce investment, and lower wealth and spending power," said Standard & Poor's Asia-Pacific chief economist Paul Gruenwald.

The firm is also of the view that with the sluggish GDP growth and reduced pressure on inflation, it has also revised its policy rate forecast for Bank Negara, saying the Malaysian central bank is likely to sustain its benchmark rate at 3.25% into 2016.

“At this juncture, we have only revised our forecast for Malaysia, given its unique position as the sole major Asia-Pacific economy that is a net oil and gas exporter,” the statement read.

The firm noted it expects to release a full set of Asia-Pacific forecasts in late March 2015.

Meanwhile, the Malaysian ringgit took a blow from the continued slump of oil prices, brought on by record weekly oil stockpiles in the United States since 1982, extending losses as this month’s worst-performing Asian currency, Bloomberg reported yesterday.

The ringgit declined 0.4% to 3.6340 against the greenback to a new low since 2009, when the currency slipped to its lowest of 3.6375 in April 2009.

On Jan 20, Prime Minister Datuk Seri Najib Razak had announced the government had revised its growth forecast to between 4.5% and 5.5%, compared to the earlier forecast of 6%.