The recent downgrade by Fitch Ratings of Malaysia’s sovereign credit outlook to negative from stable rattled stock prices briefly and prompted the government to reassure the public that it would undertake fiscal reforms.
The downgrade comes at a time when countries across Asia are seeing slowing economic growth, with both consumption and exports weakening. In many cases, the impact of the slowdown in China is seen as a big contributing factor.
The Malaysian Institute of Economic Research recently cut its forecast for GDP growth this year to 4.8% from 5.6% because of external factors. Next year it sees growth in a range of 5% to 5.5% but if the slowdown in China gets worse, those estimates could be revised downward.
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