KUALA LUMPUR: Malaysia is still fundamentally strong, the goverment’s wider fiscal deficit and lower economic growth forecast under the nation’s revised Budget 2015 notwithstanding, according to bond rating firm RAM Holdings Bhd.
RAM group chief executive officer and executive director Datuk Seri Dr K Govindan said the current Malaysia economic situation was much affected by the external factors, such as weakening crude oil prices.
“If you compare Malaysia with other countries, we are still fundamentally strong,” Govindan told reporters after signing a memorandum of understanding (MoU) with Universiti Kebangsaan Malaysia (UKM) here yesterday.
Under the MoU, UKM will offer its students RAM’s capital market certification programme. The programme aims to raise graduates’ marketability and help them meet the rising demand for skilled workers, to support capital market growth.
On Tuesday, Prime Minister Datuk Seri Najib Tun Razak said the government had revised the country’s 2015 fiscal deficit higher at 3.2% of gross domestic product (GDP), on lower crude oil prices. This compares with the earlier-estimated 3% deficit.
Najib said the government was confident of achieving GDP growth of 4.5% to 5.5% this year, which is lower than its earlier forecast of between 5% and 6%.
He said the oil price slump was positive to the export and tourism sectors. Furthermore, he said the budget revision had taken into account oil prices and other external factors, such as the ringgit’s weakness against the US dollar.
He expects oil prices to rebound to US$60 (RM217) to US$65 per barrel this year.
“The budget revision is a timely move by the government,” said Govindan, “as it provided certain comfort to the public and private sectors.”
“However, I’d advise the public to trade with caution as the economy may slow down slightly this year,” he added.
This article first appeared in The Edge Financial Daily, on January 22, 2015.