S&P Global Ratings Reaffirms Malaysia’s Sovereign Credit Ratings At ‘A-’; Outlook Stable

KUALA LUMPUR, 30 SEPTEMBER 2026 —

S&P Global Ratings has reaffirmed Malaysia’s sovereign credit ratings at ‘A-’ with a Stable outlook, a decision that underscores the international community’s confidence in the nation’s economic resilience and diversification.

This assessment, released on September 29, 2026, serves as a critical validation of the government’s economic stewardship during a period of complex global shifts.

The Stable outlook reflects S&P’s expectation that Malaysia’s prevailing policy environment will support steady fiscal performance over the next two to three years. For Malaysian and regional investors, this reaffirmation signals that the country’s macroeconomic fundamentals remain robust enough to withstand external shocks while maintaining a trajectory of steady expansion.

The agency’s confidence is rooted in a combination of structural strengths and recent policy successes that have positioned Malaysia favorably within the Southeast Asian economic landscape.

Prime Minister and Finance Minister YAB Dato’ Seri Anwar Ibrahim highlighted the strategic approach taken since the launch of the Ekonomi MADANI framework. “Since the launch of Ekonomi MADANI, we have pursued reforms gradually and in sequence, balancing the need to strengthen our fiscal foundations with the imperative to sustain growth and protect the rakyat from external volatility,” he said.

This phased reform strategy has been central to maintaining market confidence while addressing long-standing fiscal challenges.

S&P’s economic projections indicate a strong growth trajectory for the coming years. The agency expects Malaysia’s economy to grow by 5.5% in 2026, following an expansion of 5.2% in 2025 and a year-on-year growth of 5.7% in the first half of 2026. Looking further ahead, S&P forecasts an average annual growth of 5.0% over the period from 2026 to 2029.

A key metric of this performance is the estimated 10-year weighted-average real GDP per capita growth of 3.7%, a figure that stands above the global median for peers at similar income levels.

The Prime Minister noted that this per capita growth statistic is particularly encouraging. “S&P’s assessment that Malaysia’s 10-year weighted-average real GDP per capita growth remains above the global median for peers at similar income levels is encouraging. It shows that growth per person has remained strong, while we have continued to protect the rakyat from the impact of external inflationary pressures despite an increasingly challenging global environment,” he added.

This perspective emphasizes that macroeconomic stability has translated into tangible benefits for individual households, insulating them from global inflationary trends.

A significant factor in the rating reaffirmation is the recent expansion in Malaysia’s electrical and electronics (E&E) and semiconductor sectors. S&P attributed this strength to the global artificial intelligence (AI)-related investment cycle, which has driven higher shipments and increased demand for advanced manufacturing capabilities. Alongside these high-tech sectors, higher energy exports and buoyant household consumption have further bolstered the economic outlook.

The agency noted that Malaysia’s mature E&E ecosystem, supported by policy initiatives such as the Ekonomi MADANI framework and the New Industrial Master Plan 2030, is well-positioned to support longer-term economic expansion.

Malaysia’s emergence as a regional leader in digital infrastructure has also played a pivotal role in this assessment. S&P noted that the country has become Southeast Asia’s leading data-centre investment destination, attracting an estimated RM386 billion in cumulative investment between 2021 and mid-2026.

This substantial capital inflow not only diversifies the economy but also reinforces Malaysia’s position as a hub for technology and digital services in the region, adding a new layer of resilience to its industrial base.

On the fiscal front, S&P recognized Malaysia’s sustained efforts in fiscal consolidation. The fiscal deficit has narrowed significantly, dropping from 6.4% of GDP in 2021 to 3.7% in 2025. This improvement reflects the government’s continued commitment to strengthening the country’s fiscal position. The Public Finance and Fiscal Responsibility Act 2023 (Act 850) provides the legal framework for this stronger fiscal governance, ensuring transparency and effective risk management.

S&P noted that the Act has bipartisan support and will guide Malaysia’s medium-term fiscal framework, providing a stable foundation for future policy decisions.

The country’s external position remains a crucial source of resilience, supported by a large and diversified export base. Malaysia has maintained a track record of current account surpluses spanning more than two decades, a testament to its robust external balances. S&P expects the current account surplus to stabilize at around 1.8% of GDP over the next three years.

Additionally, the agency assessed Bank Negara Malaysia as having significant independence and strong monetary policy credibility, with inflation expectations remaining well anchored. This monetary stability is vital for maintaining investor confidence and ensuring that growth is sustainable and not driven by excessive inflation.

Looking ahead, the government plans to continue advancing reforms under the Ekonomi MADANI framework and the Thirteenth Malaysia Plan (13MP) 2026–2030. The focus will remain on fiscal sustainability, productivity, and competitiveness, with the explicit goal of ensuring that stronger growth translates into better opportunities and wellbeing for the rakyat. The upcoming Belanjawan 2027, scheduled to be tabled on 9 October 2026, will build on these existing reforms with further measures aimed at achieving these objectives.

Prime Minister Anwar Ibrahim outlined the next steps for the government, emphasizing the need to convert macroeconomic success into individual prosperity. “Our task now is to ensure that stronger growth translates more meaningfully into higher incomes, better opportunities and improved living standards for the rakyat. Belanjawan 2027, to be tabled on 9 October 2026, will build on these reforms with further measures to achieve that objective,” he said.

This forward-looking statement sets the stage for the next phase of Malaysia’s economic journey, focusing on inclusive growth and sustained development in the years to come.