Malaysian banks that have an A3 stable outlook are receiving an advantage of a diversified and developing economy. Economic diversification and a competitive environment are possible. Because of ample resources that are a nature’s gift to Malaysia.
Banks are generating profits due to strong executive and law-making institutions. The legislative and executive authorities have shown macroeconomic effective policies. It is the backbone of their financial stability throughout history, even during the epidemic.
The Malaysian Gross Domestic Product faced a recession in the 2020 epidemic. But Still, it is expected to rise and become stable and increase above 5 or 5.5 % in the coming year.
Moody predicts that growth prospects will be firm. The well-developed infrastructure, manufacturing sectors, and services will be the supporting pillars of economic growth along with the rich natural resources.
Initially, this year, the gross domestic product has derived from government-provided packages and movements. Yet, many activity restrictions affected the overall dynamics of the economy. However, the overall economic stability appears to be on the way. As the economic recovery is predicted to be better in the second half of 2021.
Immunization is an important factor, and the rate at which immunization is done will also have a significant impact on economic recovery.
The government is also improving its policies and laws. The effect is reflected in the better institutional strengths and strong executive institutions. They have a successful track record of effective economic policymaking.
While the assessment of credit conditions: Moody’s said it reflects asset risks to banks because of the elevated leverage among households and businesses. Household debt as a percentage of GDP rose to 93.3 % as of the end of 2020 from 82.9 % a year ago. Although the increase was driven by GDP contraction rather than credit expansion.
Despite the market’s volatility, Malaysia has hardly been in inflation in the previous decade and had an 8% yearly increase in GDP. The central bank of Malaysia supported various businesses and household startups with their small financing schemes to keep them running in the low economic time during a pandemic.