S&P keeps Malaysia’s A- rating as economy maintains strong growth momentum

On September 29, S&P Global Ratings reaffirmed Malaysia's sovereign credit rating at 'A-' with a Stable outlook. The ratings agency highlighted the economy's resilience, diversification, sustained growth momentum, and continued fiscal consolidation as key factors contributing to the assessment. S&P projects Malaysia's economy to expand by 5.5% in 2026, following 5.2% growth in 2025 and 5.7% year-on-year growth in the first half of 2026. The agency expects annual growth of around 5% between 2026 and 2029.

Prime Minister and Finance Minister Anwar Ibrahim emphasized that the rating reflects the government's efforts under the Ekonomi Madani framework, which aims to strengthen fiscal foundations while sustaining growth and protecting the rakyat from external volatility. S&P cited strong growth in electrical and electronics, semiconductor shipments, higher energy exports, and buoyant household consumption as contributing factors to the reaffirmation.

The ratings agency also noted Malaysia's emergence as the leading data-center investment destination in Southeast Asia, attracting an estimated RM386 billion in cumulative investment between 2021 and mid-2026. Malaysia's fiscal consolidation, with the fiscal deficit narrowing from 6.4% of GDP in 2021 to 3.7% in 2025, was recognized by S&P. The Public Finance and Fiscal Responsibility Act 2023 was highlighted as providing a framework for stronger fiscal governance, transparency, and risk management.

Malaysia's external position remains resilient, supported by a large and diversified export base and a history of current account surpluses spanning over two decades. S&P expects the surplus to stabilize at around 1.8% of GDP over the next three years. Bank Negara Malaysia's independence and strong monetary policy credibility were also noted, with inflation expectations remaining well anchored.

Anwar Ibrahim reiterated the government's commitment to advancing reforms under Ekonomi Madani and the Thirteenth Malaysia Plan 2026-2030, with a focus on fiscal sustainability, productivity, and competitiveness. The upcoming 2027 budget, to be presented on October 9, 2026, will build upon these reforms and introduce further measures to ensure higher incomes, better opportunities, and improved living standards for the rakyat.