Escaping middle income trap a continuous challenge for Malaysia, says S&P Global Ratings
But ratings firm says there's low risk of imbalances in the Malaysian economy
By Sangeetha Amarthalingam
Escaping the middle income trap would continue to be a challenge for Malaysia, S&P Global Ratings said, adding that the modest income levels and vulnerability to global economic conditions constrain the country’s economic resilience.
“Several factors temper these weaknesses: an open, diversified, and competitive economy with a moderately flexible labour market, reasonably developed infrastructure and a high savings rate,” the international rating agency said in its “Banking Industry Country Risk Assessment: Malaysia” report.
Nevertheless, S&P believes that the risk of imbalances in Malaysia’s economy is low, given slower credit growth and moderating property prices in recent years.
“Government and regulatory measures to tighten lending and deter speculation have moderated price increases, and we believe that the government is committed to stabilising property prices.”
S&P credit analyst Ivan Tan said the agency is of the view that Malaysian banks’ asset quality may experience modest deterioration due to slower, but still healthy, economic growth.
