For the second time this year, Malaysia’s short-term political risk rating has been downgraded. Tumbled energy prices continue indeed to negatively impact the economy – as oil & gas account for more than 10% of total exports – and foreign exchange reserves. Economic growth moderation is forecast to continue in 2016 (falling to 4.5% from 6% in 2014) on the back of continued low hydrocarbon prices and weaker Chinese demand. Poorer export data, capital outflows and central bank interventions to defend the Malaysian ringgit (MYR) have harmed Malaysia’s external liquidity. Foreign exchange reserves have indeed been curtailed by about 20% this year whereas external short-term debt remains heavy. Besides, the negative trend is exacerbated by a political crisis whereby Prime Minister Razak is embroiled via a financial scandal. That affects investor confidence and fuels the MYR depreciation which amounts to around 18% in 2015, i.e. the second sharpest drop among Asian currencies.
15 May 2018
Malaysia: Historic transfer of power after ruling coalition’s clear defeat in general elections
Event For the first the time since Malaysia’s independence in 1957, the long-ruling Barisan Nasional coalition (BN) has been defeated in the ...