KUALA LUMPUR: Malaysia rating outlook remains unchanged at A- and stable despite domestic and global developments says Standard and Poor's.
Developments over the past year ranging from the controversy surrounding the state fund 1Malaysia Development Fund (1MDB), China's policy shift and oil prices have not affected Malaysia's economic prospects and fiscal balance sheet said S&P's sovereign & international public finance ratings senior director Kim Eng Tan.
"Key risk is political risk and even that has moderated," he told a media webcast on the 2016 Credit Outlook for Asia Pacific.
The growth projection remains robust with the sovereign rating agency expecting more than 4 per cent this year and next year.
Paul Gruenwald who is chief economist for the region said Asia Pacific will continue to be the fastest growing region in the world led by India.
"Growth is however likely to remain weak in the region until confidence in the US recovery gains more traction and confidence in Chinese growth stabilises, including property or financial markets,"he said in a webcast on the regional market outlook.
S&P expects China to record a 6 per cent growth in GDP in next few years.
Gruenwald was however concerned that the export growth has slipped since the global financial crisis.
"The contribution from external demand was one fifth of GDP but it has fallen and it is now contributed by domestic demand for eight years now."
Global trade responsiveness to the GDP growth, he said, has shown that the global production is now "on-shoring" on the part of the US and China which traditionally imported capital and goods in the past.
On the US Federal Reserve Fund's impending rate hike decision tonight, he said:
"This is well choreographed Fed increase and that it has been priced in at 90 per cent suggest we should not see much market volatility.
"A 25 basis points hike today will not knock the wind off anyone's balance sheet."