S&P affirms Malaysia’s credit ratings with stable outlook

S&P Global Ratings has affirmed Malaysia’s sovereign credit ratings, maintaining ‘A-/A-2’ for foreign currency and ‘A/A-1’ for local currency, with a stable outlook. The agency cited robust economic growth, driven by an AI-led investment cycle and high energy prices, as a primary strength.

Malaysia is emerging as a major Southeast Asian data center hub, with cumulative investments estimated at 386 billion MYR between 2021 and mid-2026. S&P projects real GDP growth of 5.2% in 2025 and 5.5% in 2026. Fiscal consolidation is also underway, with net general government debt expected to fall to 67.8% this year and the government deficit projected to reach 3.1% of GDP by 2026.

Despite the positive outlook, S&P warned that political stability is essential for continued economic reforms. The agency noted that ratings could be lowered over the next 24 months if political instability occurs. Additionally, the rapid expansion of digital infrastructure is placing pressure on energy and water resources, which could impact future capital inflows if supply does not meet rising demand.